Copyright © 2006, Business Process Trends www.bptrends.com 1
Trends inBusiness Process
Management
ICSSEA Tutorial, Paris, Dec. 7, 2006
Paul HarmonExecutive Editor, Business Process TrendsChief Methodologist, BPTrends Associates
Author, Business Process Change
Copyright © 2006, Business Process Trends www.bptrends.com 2
Trends in Business Process Management
• The BPM Market Today• Level 1: Enterprise Level Trends• Level 2: Process Level Trends• Level 3: Implementation Level Trends• Where Do We Go Next?
• Case Study (If Time Allows)
Copyright © 2006, Business Process Trends www.bptrends.com 3
Why the Interest in Business Processes Today?
• Make the company more efficient and productive by improving existing processes
• Allow the company to shift goals or get into new businesses by providing the company with the ability to quickly and efficiently create new business processes
• A management philosophy that seeks to create and maintain competitive advantage by integrating all of the activities into highly efficient and effective value chains
• IT: Take advantage of SOA, XML and BPM Systems technologies
• IT: New approach to facilitating business-IT communication
Copyright © 2006, Business Process Trends www.bptrends.com 4
Dell Computers and the Future of Corporations
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What is Business Process Management?
• Michael E. Porter, Competitive Strategy, 1980• Edwards W. Deming, Out of the Crisis, 1986• Geary Rummler & Alan Brache, Improving Performance, 1990• James Harrington, Business Process Improvement, 1991• Michael Hammer & James Champy, Reengineering the Corporation,
1993• August-Wilhelm Scheer, Business Process Engineering, 1994• Carnegie Mellon/Software Eng. Inst. The Capability Maturity Model,
1995• Kaplan, Robert S. and David P. Norton. The Balanced Scorecard:
Translating Strategy into Action,1996. • Supply Chain Council. SCOR Reference Manual 1.0, 1997• Thomas Davenport, Mission Critical, 1999; Working Knowledge, 2005• Howard Smith & Peter Fingar, Business Process Management: The
Third Wave, 2002• Paul Harmon, Business Process Change: A Manager’s Guide, 2003
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Michael Porter and Process Management
• The father of the modern Business Process Management movement is Michael E. Porter of the Harvard Business School
• 1980 Competitive Strategy• 1985 Competitive Advantage• 1990 The Competitive Advantage of Nations• 1996 “What is Strategy?” (HBR,Nov-Dec 1996)• First and foremost, Business Process Management is a
management philosophy and a methodology for increasing profits and obtaining competitive advantage
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Michael Porter on Competitive Advantage
• Competitive advantage allows a company to dominate its industry for a sustained period of time
• “Ultimately, all differences between companies in cost or price derive from the hundreds of activities required to create, produce, sell, and deliver their products or services such as calling on customers, assembling final products, and training employees… “
• “Activities, then, are the basic units of competitive advantage.”
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Operational Effectiveness and Strategy
• “Operational effectiveness means performing similar activities better than rival perform them.”
• “Few companies have competed successfully on the basis of operational effectiveness over an extended period, and staying ahead of rivals gets harder every day.”
• “Strategic positioning means performing different activities from rivals’ or performing similar activities in different ways.”
• “While operational effectiveness is about achieving excellence in individual activities, or functions, strategyis about combining activities.”
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Fit and Competitive Advantage
• “Competitive advantage grows out of the entire system of activities. The fit among activities substantially reduces cost or increases differentiation.”
• “Achieving fit is difficult because it requires the integration of decisions and actions across many independent subunits.”
• “Positions build on systems of activities are far more sustainable than those build on individual activities.”
• Michael E. Porter. “What is Strategy?” HBR, Nov-Dec 1996.
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The Focus of Functionally-Oriented Executives
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The Focus of Process-Oriented Executives
Value ChainMajor Processes: New Product Development, Supply Chain/Manufacturing, Sales & Marketing
Value Chain ManagerCustomers
Markets
Value ChainMajor Processes: New Product Development, Supply Chain/Manufacturing, Sales & Marketing
Value Chain Manager
CustomersMarkets
Value ChainMajor Processes: New Product Development, Supply Chain/Manufacturing, Sales & Marketing
Value Chain Manager
CustomersMarkets
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What a Process Perspective Shows
Production Marketing Sales & SupportFinanceEngineering
Managment
Customers
DevelopNew Product
Promote Product
Produce Products
Sell & Service
Products
Suppliers
new need
identifiednew product design
Product available
promotions
order
product deliveredmaterials
Product Value Chain
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An Aside on the Meaning of Process
Value Chain
Business Process Business Process Business Process
ProcessProcess Process
Sub-Process Sub-ProcessSub-Process
Sub-Sub-Process
Activity Activity
Sub-Sub-Process
ArchitectureSCOR Framework
Process Redesign ProjectsBusiness Rule Projects
Six Sigma ProjectsIT Automation Projects
SAP Process Models
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The BPTrends Associates Pyramid
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The Three Areas of Process Change
Strategy orEnterpriseLevel
ProcessLevel
ImplementationLevel
EmployeeImplementationLevel
ITImplementationLevel
EnterpriseManagement
Activities
ProcessAnalysis & Redesign
Projects
Specific ProcessImprovement
Projects
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Where Organizations Are Moving
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Most Companies Have a Variety of Efforts
Strategy orEnterpriseLevel
ProcessLevel
ImplementationLevel
EmployeeImplementationLevel
ITImplementationLevel
The Typical SituationThere is no enterprise process model,
measurement and process managementsystem in place.
In this case projects are undertaken in amore random way, often by different
groups without tight coordination.
Equally important, changing processesnot only require altering the specific
processes but also require that aprocess management and measurement
system be established.
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We Advocate You Create Process-Centric Company
The Ideal SituationAn enterprise process model, measurement andprocess management system is already in place.
In this case the organization can consider allits options and choose processes to target.
Equally important, changing processes won'trequire the creation of a management or a
measurement system, as they will already existand base lines for change will already be
established.
Strategy orEnterpriseLevel
ProcessLevel
ImplementationLevel
EmployeeImplementationLevel
ITImplementationLevel
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A Realistic Look at Process Change
The SEI Capability Maturity Model (CMMI)
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Some BPM Standards
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BP Initiatives Underway in 2005
Development of an Enterprise Process
Archiecture
13%
Major Process Redesign projects
12 %
None 4%
Lean Six Sigma Process Modeling and Redesign
Training 5%
Redesign Projects With Frameworks (SCOR, ITIL)
4%
Process Manager Training
6%
Six Sigma Process
Improvement Projects
7%
Balanced Scorecard
8%
Coordinating Enterprise Process
Management Efforts
8%Development of an Enterprise Process
Performance Measurement System
8%
Major Process Automation Projects
8%
Process Analysis and Redesign Training (Non- Six Sigma )
8%
Coordinating Enterprise Process
Change Efforts
9%
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The Size and Shape of the Business Process Market
BPM SuitesWorkflow/EAI& Monitoring
Software$ 1-1.5B
EA &Business Process
Redesign$ 250 M
LeanSix SigmaProcess
Improvement$ 250M
BusinessRules Software & Consulting
$ 250 M
BalancedScorecard
$ 50 M
BP Outsourcing$40 B
HPTConsulting
$50 M
SCORFrameworksConsulting
$50 M
ERC, CRM &Other Packaged Business
Applications$50 B
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Trends in Business Process Management
• The BPM Market Today• Level 1: Enterprise Level Trends• Level 2: Process Level Trends• Level 3: Implementation Level Trends• Where Do We Go Next?
Copyright © 2006, Business Process Trends www.bptrends.com 24
Key Enterprise Level Considerations
1.1 Enterprise Level Activities1.2 Business Process Strategy
Themes and Financial MeasuresOrganizational Mapping and Stakeholders
1.3 Business Process ArchitectureSCOR
1.4 Process Performance MeasuresBalanced Scorecard
1.5 Business Process Managers1.6 A BPM Group
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The BPTrends Associates BPM Methodology
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Enterprise Level Activities
• Define Strategy• Model Business Processes• Define Process Performance Measures• Align Resources to Processes• Organize Process Management• Create a BPM Group to Provide Support• Prioritize and Plan Process Changes
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The Work of the Strategy Committee
Define BusinessStrategy
Monitor Strategic
Performance
Monitor Environment for Changes
Propose Changes in Strategy As
Needed
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Strategy, Measures, and ProcessesCompetitve/
Positioning Strategy
Productivity Strategy
GrowthStrategy
Improve Cost
Structure
Increase Asset
Utilization
Expand Revenue
Opportunities
Enhance Customer
Value
Product or ServiceCustomer
CustomerCustomer
Customer
Market
Value Chain
Strategic Theme
Strategic Theme
Strategic Theme Strategic
Theme
FinancialMeasures
Expand Market
Improve Product/Service
Create New Products
Manage Sales & Marketing
Create Product/Service
Enabling Processes
Improve Value Chain Processes
Achieve Competitive Advantage
Integrate & Align Value Chain Processes
External Measures
Internal Measures
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Strategic (Process) Themes
• An idea introduced by Porter and promoted recently by Kaplan & Norton (Balanced Scorecard)
• Porter argued that a value chain should be tightly integrated, and focused on producing a product or service that was well positioned
• Thus, when a positioning strategy is selected, the strategy group should proceed to define a set of themes and typical activities to show how the positioning strategy is to be implemented
• This isn’t process design, but simply a way of suggesting how a process design would implement the strategic position the strategy group identified
• The actual process designers should then assure that ALL activities in the actual process reflect the themes
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Strategic Themes for Southwest Airlines
Overall theme: Low cost, on time airline
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Michael Porter’s Value Chain Model
New ProductDevelopment Operations Distribution Marketing
and SalesService
Procurement
Technology Development
Human Resource Management
Corporate Management
Margin
Supp
ort P
roce
sses
Cor
e Bu
sine
ss P
roce
sses
Finance and Accounting
From Michael Porter, Competitive Advantage, Harvard, 1985
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Unisys Corp. Functions and Value Chains
UnisysSenior
Management
Marketing FinanceSales ServiceManufacturingNew ProductDevelopment
Strategy Committee
Value Chain: Systems Integration
Value Chain: Outsourcing
Value Chain: Network Services
Value Chain: Core Services
Value Chain: Enterprise Server Technology
Other Value Chains
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Mapping Organizations and Core Processes
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Identifying What’s Valuable to Stakeholders
Customers
people
technology
capital
sales contacts
product delivered
information & dividends
service requests & complaints
materials
competitive products
An Organization / A Specific Value Chain
orders
prospect identification
advertising
Market
Vendors
Research Community
Captial Markets
Labor Markets
Suppliers & Partners Customers & Owners
Shareholders
Customers
:General Environmental InfluencesThe US and world economies , government regulations ,
and social trends
Competition
Development
analysis of competitor’s
products
Marketing
Sales & Service
New Product
Supply ChainManufacturing
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Stakeholders
• People who care about and exert influence over the company, its processes, and its products– Owners (shareholders)– Customers (and markets)– Employees– Managers– Partners– Suppliers– Government (legal, regulatory)– Public– Competitors
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Representing a Business Process Architecture
• A diagram that senior management can use to visualize the BP architecture– Useful, but keep it simple
• A matrix that pulls all the information together in one place– What we’ll do in this class
• A repository that makes it easy to alter and add elements to the architecture as they become available– What you’ll want to create at your company for the
long haul
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Creating a BP Architecture
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Core, Managerial, and Supporting Processes
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The Supply Chain Council’s SCOR
• The best example of a popular horizontal BP architecture is provided by the Supply Chain Council’s SCOR framework
• Created in past 5 years by consortium of some 700 companies
• Defines a top-down approach to organizing the BP architecture of a corporate supply chain process
• www.supply-chain.com
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SCOR MODEL: Level 0
Resources
Business
Customers
Value Chain: E.g. Consumer PCs
SupplyChain
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SCOR MODEL: Level 1
SupplyChain
DeliverMakeSource
Plan
Return
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SCOR MODEL: Level 2
Source
Plan
Return
DeliverMake
S3 Source ETO Products
S1 Source
S2 SourceMTO Products
Stocked ProductsM1 Make-to-Stock
M2 Make-to-Order
M3 Engineer-to-Order
D1 Deliver
D2 Deliver MTO Products
D3 DeliverETO Products
Stocked Products
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SCOR Model: Level 3
S3. Source ETO ProductS3.1
ScheduleProduct
Deliveries
S3.2
ReceiveProduct
S3.3
VerifyProduct
S3.4
TransferProduct
S3.5
AuthorizeSupplierPayment
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SCOR Material Flow Diagram
Latin AmericanLatin AmericanSuppliersSuppliers
(D1)
WarehouseWarehouseWarehouseWarehouse
Other SuppliersOther SuppliersOther SuppliersOther SuppliersOther SuppliersOther SuppliersOther SuppliersOther SuppliersOther SuppliersOther SuppliersOther SuppliersOther Suppliers(D1)
ManufacturingManufacturing
European SupplierEuropean Supplier(S1)(SR1,SR3)
Customer
Customer
Customer
Customer
(S1, D1)(SR1,DR1,DR3)
(S1, S2, M1, D1)(SR1,SR3,DR3)
(D2)(DR1)
WarehouseWarehouseWarehouseWarehouse
WarehouseWarehouseWarehouseWarehouse
WarehouseWarehouseWarehouseWarehouse
(S1, D1)(SR1,DR1,DR3)
(S1, D1)(SR1,DR1,DR3)
(S1, D1)(SR1,DR1,DR3)
(S1)(SR1,SR3)
(S1)(SR1,SR3)
(S1)(SR1,SR3)
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SCOR As Is Process Diagram
S1 M1 D1 S1
S1 D1 S1M1 D1
Key OtherRM Suppliers
EuropeanRM Supplier
RMSuppliers ALPHA
AlphaRegional
WarehouseCustomer
DR1 SR1 DR1 SR1
SR3DR3
P1
P2
P3
P4
P1
P2
P3
P4
P1
P2 P4
S2 M2
DR1
D2
SR1
S2
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SCOR’s Level 1 MeasuresPerformance
Attribute Performance Attribute Definition Level 1 Metric
Supply Chain DeliveryReliability
The performance of the supply chain indelivering: the correct product, to the correctplace, at the correct time, in the correctcondition and packaging, in the correctquantity, with the correct documentation, tothe correct customer.
Delivery Performance
Fill Rates
Perfect Order Fulfillment
Supply ChainResponsiveness
The velocity at which a supply chain providesproducts to the customer. Order Fulfillment Lead Times
Supply ChainFlexibility
The agility of a supply chain in responding tomarketplace changes to gain or maintaincompetitive advantage.
Supply Chain Response Time
Production Flexibility
Supply Chain Costs The costs associated with operating thesupply chain.
Cost of Goods Sold
Total Supply Chain ManagementCosts
Value-Added Productivity
W arranty / Returns ProcessingCosts
Supply Chain AssetManagementEfficiency
The effectiveness of an organization inmanaging assets to support demandsatisfaction. This includes the managementof all assets: fixed and working capital.
Cash-to-Cash Cycle Time
Inventory Days of Supply
Asset Turns
Cus
tom
er F
acin
g A
ttrib
utes
Inte
rnal
Fac
ing
Attr
ibut
es
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SCOR Manual: M2.3 (1)
Process Element: Produce and Test Process Element Number: M2.3Process Element DefinitionThe series of activities performed upon sourced/in-process product to convert it from the raw or semi-finishedstate to a state of completion and greater value. The processes associated with the validation of productperformance to ensure conformance to defined specifications and requirements.Performance Attributes MetricReliability Ratio Of Actual To Theoretical Cycle Time
Scrap expenseIn-process failure ratesYields
Responsiveness Produce and Test Cycle TimeFlexibility None IdentifiedCost Warranty costs as % of (S+M+D) costs
Total Production EmploymentProduce and Test costs / unit
Assets Capacity utilizationAsset Turns
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SCOR Benchmarks Provide Instant ROI
50%
$30M Revenue
$30M Indirect Cost
35 days
97 days
0%
63%
Supply Chain SCORcard Industry Benchmarks
Overview Metrics SCOR Level 1 Metrics Actual Parity Advantage Superior Value from Improvements
Delivery Performanceto Commit Date 85% 90% 95%
Fill Rates 94% 96% 98%
EX
TER
NA
L
Supply ChainReliability
Perfect OrderFulfillment 80% 85% 90%
Order FulfillmentLead Times 7 days 5 days 3 days
Flexibility
Responsiveness
Production Flexibility 30 days 25 days 20 days
Total SCMManagement Cost 19% 13% 8% 3%
INTE
RN
AL
Cost Warranty Cost NA NA NA NA NA
Value Added EmployeeProductivity NA $156K $306K $460K NA
Inventory Days ofSupply 119 days 55 days 38 days 22 days NA
Assets Cash-to-Cash CycleTime 196 days 80 days 46 days 28 days
Net Asset Turns(Working Capital) 2.2 turns 8 turns 12 turns 19 turns NA
Supply ChainResponse Time 82 days 55 days 13 days
45 days
$7 M Capital Charge
Key enabler to cost andasset improvements
$30M Revenue
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Balanced Scorecard and SCOR Measures
Balanced
Scorecard
Concepts
Porter’s
Strategic
Themes
Concept
SCOR
Performance
Attributes
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SCOR+ Towards a Complete Value Chain
Research Design Integrate
DCOR
Analyze Develop Market
MCOR
Plan
Plan
Mar
ketin
gR
&DP
rocu
rem
ent
Man
ufac
turin
gS
ales
&
Dis
tribu
tion
Ser
vice
Plan
Plan Relate Sell Contact
CCOR
Deliver
SCOR
Make
Source
AssistReturnAmendRevise
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Kaplan and Norton’s Balanced ScorecardECI's Balanced Business Scorecard
Customer Perspective
Financial Perspective Internal Business Perspective
Innovation & Learning Perspective
Goals
Survive
Succeed
Prosper
Measures
Cash flow
Quarterly sales growth & operatingincome by division
Increased market share and ROE
Goals
Technologycapability
Manufacturingexperience
Designproductivity
New productintroduction
Measures
Manufacturing geometry vs.competition
Cycle time, Unit cost, Yield
Silicon efficiency, Engineeringefficiency
Actual introduction schedule vs. plan
Goals
Technologyleadership
Manufacturinglearning
Product focus
Time to market
Measures
Time to develop next generation
Process time to maturity
Percent of products that equal 80%sales
New product interdiction vs.competition
Goals
New products
Response supply
Preferred supplier
Customerpartnership
Measures
Percent of sales from new products,Percent of sales from proprietaryproducts
On-time delivery (defined by customer)
Share of key accounts' purchases,Ranking by key accounts
Number of cooperative engineeringefforts
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Scorecard, Processes, & Process Managers
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Branching Scorecard Systems
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What is the Organizational Structure?
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Coordinating the Management of Processes
CEO
Executive Committee
ProcessManagementTeam
DeliveryDepartment
ManufacturingDepartment
SalesDepartment
Customer
Process ArchitectureCommittee
Sales Supervisor Manf.Supervisor
DeliverySupervisor
Widget Value Chain
SalesProcess
DeliveryProcess
ManufacturingProcess
VPDelivery
VPManufacturing
VPSales
SVP WidgetProcess
WidgetProcess
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Your BPM Driver
• Any major Enterprise Level BPM effort requires the strong support of the CEO
• In most companies, a major BPM effort is organized around a “Driver” that gives impetus and focus to the effort– Winning the Baldrige Award– Establishing a More Efficient Performance
Measurement System– Embracing Six Sigma Effort Companywide– Overtaking a Competitor– Installing a Single Instance of SAP
Copyright © 2006, Business Process Trends www.bptrends.com 57
The BPM Group
Create and maintain the enterprise business process architecture
(Maintain BPM repository)
BPM Group
Help create, maintain and manage the process performance system
Help create and support the process manager system
(Create/Maintain BP management training)
Maintain up-to-date BP architecture
Use architecture to analyze, prioritize & scope process change options
Report on corporate process performance
Identify problems & recommend solutions
Train all new managers in business process techniques
Recruit, Train, Manage BP Change Professionals
(Standardize on methodologies, BP tools)
Manage Risk / Standards Reporting & Documentation
BPM Group Processes:
Prepare reports for Sarbanes-Oxley & ISO 9000 documentation
Manage managers BP scorecards & evaluations
Acquire BPM tools
Manage BP change projects
BP manager job descriptions
Mission I: Strategy/Org Model: Plan to Create
Mission II: BP Architecture: Plan to Create
Mission III: Align Resources: Plan to Create
Mission IV: Perf Measurement System:
Plan to Create
Mission V: Management System: Plan to Create
Mission VI: BPM Group: Plan to Create
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US Federal Enterprise Architecture Framework (FEAF)
The FEAF Performance Reference Model (PRM)
Other FixedAssets
INPUTS
HumanCapital
FinancialQualityEfficiencyInformationReliabilityAvailabilityEffectiveness
Technology
Strategic Outcomes
Value
Value
Value
Mission & BusinessResults
Services for CitizensSupport Delivery ofServicesManagement ofGovernment Resources
Customer Results
Customer BenefitService CoverageTimeliness &ResponsivnessService Accessibility
Processes and ActivitiesQualitySecurity & PrivacyManagement Innovation
FinancialProductivity & EfficiencyCycle Time & Timeliness
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Trends in Business Process Management
• The BPM Market Today• Level 1: Enterprise Level Trends• Level 2: Process Level Trends• Level 3: Implementation Level Trends• Where Do We Go Next?
Copyright © 2006, Business Process Trends www.bptrends.com 60
Key Process Level Considerations
2.1 The Process Level Focuses on Projects2.2 Approaches to Process Change2.3 Process Change Gaps2.4 Specific Problems and Analytic Techniques2.5 Lean Six Sigma
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The Process Level Combines Projects and Methodologies
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BPR Methodologies
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The BPTrends Associates BPM Methodology
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A Successful Project Needs to Be Managed
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High-Level Process Problems
Inputs Outputs
"Supplier" Contract
"Customer" Contract
Process A
Subprocess A-3
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Mid-Level Process Problems
5. Smooth Flow Without Unnecessary Activities6. Logical Decision Points and Clear Business Rules7. Minimum Time for Activities and for Handoffs8. All employees know and perform necessary activities9. Automation used were helpful and responsive where used10 Subprocess performance is well defined and acceptable
Process Measures:External Measures: Quality and TimelinessInternal Measures: Output-to-Cost and Cycle Time
Inputs Outputs
"Supplier" Contract
"Customer" Contract
Process A
Subprocess A-3
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Activity and Task-Level Process Problems
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The Heart of Redesign: Finding and Eliminating Gaps
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A Problem is a Difference Between What Is and What is Desired
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Defining the Nature of the Gap
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A Simple Example
Measures of As-Is Process’s
Performance
Desired Measures of To-Be Process’s
PerformancePerformance Gap
Capabilities Gap
What is Done Now
What Will Need to Be Done
Analysis Techniques Used to Define the Gap
Redesign Techniques Used to Modify the Capabilities of the Process
Management Wants
Process Outputs in
Half the Time
A Time Study Shows that Work Often Goes to Inventory Between Workstations and Stays
There on Average 3 Hours
Lean Technique:Streamline Flow by Reorganizing Steps to Eliminate
Moving Work to Inventory
Product Production
Cycle Currently Takes 5 Hours
Existing orAs-Is
Process
Redesigned or To-BeProcess
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You Keep Working at Eliminating the Gap
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The Five Areas of a Project Scoping Diagram
Enablers
Outputs
Inputs
Guides
The Processes/Subprocesses
-in-ScopeAnd the Management of
the Same
Information that will be referenced by processesMethods and Rules that will guide the
processingEvents – Triggering & Completion
Inputs to Process:
Material to be transformed
Information to be processes
States to be changedPeople
Results of Processing
People assigned to processTechnologies used in process
Facilities that are used
1 23
4
5
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An IGOE is a Variation on a Cause-Effect Diagram
We simply find it easier to write in blacks than on fish bones and we can use the space in the center for simple flow diagrams
Problem
Effect:
Causes
Process Flow
Process Inputs
Process Outputs
Enablers Guides
45
123
Process Management
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The Work of a Day-to-Day Process Manager
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Processes Components & Interface Requirements
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Business Process Notation
Rummler-Brache, UML Activity Diagrams, BPMN
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Six Sigma at the Process Level: DMAIC
3. Analyze 4. Improve 5. Control2. Measure
ImplementMeasurement
Document andMaintain
PlanProject
IdentifyMeasures Analyze Data
1. Define
1. Define project2. Identify customerrequirements3. Documentprocess4. Set goal
1. Identify Measures2. Define measures3. Develop & testdata collectionmethods4. Define baselinemeasures
1. Analyze date2. Explore possiblecauses and testhypothesises3. Identify causes
1. Select a soluton2. Pilot test solution3. Implement full scalesolution
1. Document andkeep score of results
1-2 wks.
1-2 wks.
2 wks.
4-8 wks
ongoing
-1-2-3 +1 +2 +368.26%95.46%99.73%
0.13%
0.13%
mean
34.13%
13.06%2.14%
Copyright © 2006, Business Process Trends www.bptrends.com 79
What’s Impressive About Six Sigma
• The results it can achieve when it enters the organization with serious support from the CEO– Welch at GE tied each senior manager’s bonus to Six Sigma
results• The rigor the program creates: Master Black Belts,
Black Belts, Green Belts, etc.• The techniques that have grown up around Six Sigma• Its “sales” approach is based on calculations of money
saved– A black belt costs $50K to train and will generate $250K of
saving /year• Despite the results there is no industry standards
group
Copyright © 2006, Business Process Trends www.bptrends.com 80
Lean and Six Sigma
• Six Sigma – Maximizing Process Quality & Consistency– Began at Motorola in mid-Eighties– DMAIC for Process Improvement– DMADV for New Process Design– Design For Six Sigma (DFSS)– TRIZ for Innovation
• Lean (Kaizen)– Smoothing Flow & Minimizing Waste– The Machine That Changed The World by James Womack,
Daniel Jones & Daniel Roos (Harper, 1990)– Flow Kaizen – Focus on improving high level flow– Process Kaizen – Focus on the elimination of waste
Copyright © 2006, Business Process Trends www.bptrends.com 81
Lean Flow Kaizen: Value-Stream Mapping
Copyright © 2006, Business Process Trends www.bptrends.com 82
Trends in Business Process Management
• The BPM Market Today• Level 1: Enterprise Level Trends• Level 2: Process Level Trends• Level 3: Implementation Level Trends• Where Do We Go Next?
Copyright © 2006, Business Process Trends www.bptrends.com 83
Implementation Level Considerations
3.1 Implementation3.2 A Very Robust BP Tools Market3.3 BPMS Systems Development3.4 Business Rules3.5 The Evolution on ERP Systems3.6 Process Performance Monitoring Systems
Development3.7 Implementation Level Standards
Copyright © 2006, Business Process Trends www.bptrends.com 84
Implementation is Managing the Work of Others
Copyright © 2006, Business Process Trends www.bptrends.com 85
Types of Process Implementation
Depending on the project, there will be different needs for changes:• Changes in Product Design or Facilities• Implementing Employee Systems Changes
– Job Definitions– Training Programs– Motivation/Incentive Systems, etc.
• Implementing IT System Changes– BPM Systems/Workflow/EAI– Rule-Based Management Systems– Applications Purchased (ERP-CRM)/Developed
• Implementing Process Governance Changes• Process Owner Training• Process Performance Monitoring Systems• Business Process Outsourcing
Copyright © 2006, Business Process Trends www.bptrends.com 86
Business Process Software Products
BPM SuitesModeling Capability
+ BPM Engine
BPMApplications
Modeling Capability+ BPM Engine
+ Application Components
BPLanguages
EAI Tools
ProcessSimulation
Tools
BI and Data WarehouseProducts
UniversalBP Repository
Database capable ofstoring information
from all the BP tools.
OrganizationModeling Tools
Business ProcessArchitecture Tools
Packaged/EnterpriseApplication
Suites
StatisticsTools
GraphicsTools
Tool for creating, storingand using business rules.
Business RuleManagement Tools
BPModeling
ToolsModeling Capability
+ Repository
Modeling Capability +Ability to Monitor Runtime Process+
Dashboard Capability
BPMonitoring
Tools
XML DSLs andBPEL, BPML
Software DevelopmentSuites
Application Servers
WorkflowTools
Copyright © 2006, Business Process Trends www.bptrends.com 87
The Architecture of a Serious Modeling Tool
Multiple ModelingScreens
Product Metamodel
ProductRepository(Database)
SimulationEnvironment
Interface: Ability to Access Models Via a PC or a Browser
Index to All Models, Processes, Attributes, etc.
Multiple ModelingScreensMultiple Modeling
ScreensMultiple ModelingScreens
Can supportmultiple notations
(e.g. BPMN)
Can support standardinterchange metamodel
(or repository model)(e.g. CIF, OMG Process
Metamodel)
Copyright © 2006, Business Process Trends www.bptrends.com 88
Business Process Management Systems
• BPMS (Not, BPM, please)• Much confusion, spread in part by Smith & Fingar’s Business
Process Management: The Third Wave (Megan-Kiffer, 2003)• In essence, we are talking about a successor to Workflow and EAI
technologies that make it possible to automate the execution of business processes
• The underlying assumption is that IT resources ought to be organized to implement explicit business processes
• The good news is that it’s now driving a lot of interest in BPM (used in its more generic sense).
Copyright © 2006, Business Process Trends www.bptrends.com 89
A BPM Suite
A B EDC
Software Tool That Displays a Graphical View of a ProcessLogical
Description ofthe Process
PhysicalImplementationof the Process
SoftwareComponent
B
SoftwareComponent
C
EnterpriseApplicationModule D
EnterpriseApplicationModule E
Software Tool (Engine)That Manages Links
Between Diagram andImpelementation
BPMSEngine
For more information, check the BPTrends BPM Suites Report – www.bptrends.com
Copyright © 2006, Business Process Trends www.bptrends.com 90
The Key is Controlling the Business Process
A B E
D
C
Software Tool That Displays a Graphical View of a Process
Logical Description of the Process
PhysicalImplementationof the Process
SoftwareComponent
C
SoftwareComponent
B
EnterpriseApplicationModule E
Software Tool(Engine) That
Manages LinksBetween Diagram
and Impelementation
BPMS Engine
EnterpriseApplicationModule D
UserInterface
Business AnalystInterface
Copyright © 2006, Business Process Trends www.bptrends.com 91
Generic Model of a BPMS Product
Knowledge
Utilities
Engines
Process Modeling
Environment
Rules Engine EAI EngineWorkflow Engine
Middleware/Application Server
Development Environment
Management Environment
Developers
Employees Software Applications
Process Managers
Eg. J2EE Server:
WebSphere
Eg. Windows .NET Server:
BizTalk
Eg. ERP Server: NetWeaver
Specific Rule Sets or
Ontologies
Specific Business Models
Complete Process
Frameworks
BPM Repositories/Databases
Process Modeling
Environment
Copyright © 2006, Business Process Trends www.bptrends.com 92
BPM Systems and SOA
• Service Oriented Architectures (SOA) refer to systems that use the Web and XML protocols to dynamically call software components as they are needed
• SOA is still building up momentum in the US and there are only a few large applications that truly implement this approach
• SOA will continue to evolve, however, and BPM systems will be key to developing applications
• We are approaching the point where companies will have to share business process descriptions to achieve their goals
Copyright © 2006, Business Process Trends www.bptrends.com 93
BPM and SOA: Necessary Conjunction
Figure After a BPTrends Column by Mike Rosen, Jan. 2006
Copyright © 2006, Business Process Trends www.bptrends.com 94
Aligning Processes and Business Rules
Specific
Activity
Business Process
Physical Plant and
Human Resource ArchitectureIT Architecture
Data
ArchitectureApplication
Architecture
Network
Architecture
Application
Designs
and Code
Database
Designs and
Data
Management
Systems
Technology
Architecture
Hardware Architecture
JobDesignActivity
Measurement
PlanActivity
Management
Plan Job Aids,
Training
Programs,
Knowledge
Management
System
Activity/
Performance
Monitoring
SystemPlans, Budgets,
Hiring, Resource
Allocation,
Feedback,
Consequences
Human-IT
Interface
Model
Screensand
Reports
Logical
Level
Physical
Level
Hardware Used
HumanResource
Architecture
ITArchitecture
Rules Embeddedin SoftwareApplications
Rules Embeddedin Manuals and
ProcessDocumentation
Specific Setof Rules
Organization GoalsOrganization Policies
Organization Ontologyand SpecificBusiness Rules
Implementation(Uses of Rules)
Strategy or EnterpriseLevel
Organization Performance
BusinessRulesLevel
BP Architecture
BP Analysis& Redesing
ImplementationLevel
BusinessProcess
Level
The Business Rules ManagementPerspective
The Business Process ManagementPerspective
Strategy and Goals
Strategy or EnterpriseLevel
Organization Compliance
Copyright © 2006, Business Process Trends www.bptrends.com 95
A Little History Review
Copyright © 2006, Business Process Trends www.bptrends.com 96
The Business-Expertise Continuum
Business Knowledge (Business Policies)
Business Rules
Expert Knowledge (Not formalized)
Expert Rules
Business Processes Often Include a Mix of Business and Expert Rules
Based on PoliciesDerived Top-DownDerived LogicallyRelatively Straight-ForwardDo Not Usually Involve Complex, Deep Hierarchies of Knowledge Objects
Based on ExperienceDerived Case by CaseDerived EmpiricallyRelatively ConvolutedUsually Involves Complex, Deep Hierarchies of Knowledge Objects
“Knowledge Workers”
Decision Systems and
Aids That Capture Limited
Modules of Expertise
Copyright © 2006, Business Process Trends www.bptrends.com 97
BPM, ERP and CRM
• Davenport’s Mission Critical (HPR Press, 1999)• Most major companies have installed at least some
packaged applications (ERP, CRM)• Many have spent 100s of millions and many are
disappointed with the results• Most BP consultants think the difference between likely
success and likely failure lies with how well understood and modeled a company’s business processes are before the ERP effort begins
• Letting IT undertake ERP – as a technology effort –without first getting the business processes organized is a recipe for failure
Copyright © 2006, Business Process Trends www.bptrends.com 98
A Customized ERP Suite
Copyright © 2006, Business Process Trends www.bptrends.com 99
Reality: Multiple Processes and ERP Instances
Copyright © 2006, Business Process Trends www.bptrends.com 100
Standardizing Processes to Standardize Instances
Copyright © 2006, Business Process Trends www.bptrends.com 101
AP is a Process-Focused Company
Copyright © 2006, Business Process Trends www.bptrends.com 102
A Set of ERP Modules Managed by BPMS
Copyright © 2006, Business Process Trends www.bptrends.com 103
BPM Suites vs. BPM Applications
• Vendors will evolve from generic tools to applications• Meantime ERP and CRM vendors are trying to
incorporate BPM tools– SAP’s NetWeaver– Microsoft’s BizTalk Server– Oracle’s BPM Suite
• One Way or Another We Are Going to Move Beyond the Rigidity of the Current Line of Enterprise Applications
• In the Process Managers Will Get a Lot More Flexibility and Control
Copyright © 2006, Business Process Trends www.bptrends.com 104
SAP Architecture - ISAP Telecommunications Business Architecture
Supply NetworkDesign
Demand & SupplyPlanning eProcurement
ProductionPlanning &Execution
Supply ChainCoordination
WarehouseManagement
CreditManagement Pre-Billing Convergent
Invoicing eBPPReceivables &
CollectionsManagement
DisputeManagement
Sales CycleManagement
Site Survey &Solution Design
ContractManagement
ProjectManagement
OrderManagement &
FulfillmentProvisioning
Product Selling Contract Management Order Management Service Activation
Marketing &Campaign
ManagementSales Management Dealer Management Customer & Retention
Management Customer Care
Strategic EnterpriseManagement Business Analytics Business Intelligence
& Decision Support Accounting Workforce Planning &Alignment
Human ResourcesOperations Sourcing
& DeploymentTravel Management Financial Supply
Chain ManagementTreasury/Corporate
Finance Management Real Estate
Demand Planning RequirementsPlanning
InvestmentManagement
Network Design &BUild
Operation &Maintenance
Content & IntellectualProperites Management Advertising Management Mobile Business & Wireless
ASP eLearning
Service Agreements Customer Trouble Reporting Customer TroubleManagement Trouble Resolution
EnterpriseManagement
CustomerRelationshipManagement
Sales & OrderManagement --
Standard Products
Sales & OrderManagement --
Customer Solutions
Service Assurance
Customer FinancialsManagement
Supply ChainManagement
Network LifecycleManagement
Value Added Services
Business Support
Copyright © 2006, Business Process Trends www.bptrends.com 105
The Chordiant BPMS Suite
Marketing Processes
MPComponent 5
BPMS Engine
MPComponent 1
ChordiantContact Center
Chordiant RetailChannel
ChordiantMarketing
Customer
InternetMail/Telephone
Face-to-Face
Retail Channel Processes Contact Center Processes
Call Center Process 1Call Center Process 1Call Center Process 1Call Center Process 1Call Center Process 1Call Center Process 1Call Center Process 1Call Center Process 1Call Center Process 1
Call Center Process 1Call Center Process 1Call Center Process 1Call Center Process 1Call Center Process 1Call Center Process 1Call Center Process 1Call Center Process 1Retail Channel Proc. 1
Call Center Process 1Call Center Process 1Call Center Process 1Call Center Process 1Call Center Process 1Call Center Process 1Call Center Process 1Call Center Process 1Marketing Process 1
MPComponent 1
MPComponent 1
MPComponent 1
MPComponent 1
ChordiantStraightThroughservice
Processing
MPComponent 8
MPComponent 1
MPComponent 1
MPComponent 1
MPComponent 1
MPComponent 1
MPComponent 2
MPComponent 1
MPComponent 1
MPComponent 1
MPComponent 1
MPComponent 1
ChordiantProcessDesigner
ChordiantInterfaces forEmployeesUsing Suite
Most Software Components Are From Chordiant, But the Suite Can Just as Easily Use Other ComponentsWith Their Own Databases
Uses Corticon Rules Engine
Copyright © 2006, Business Process Trends www.bptrends.com 106
Process Monitoring (BAM) vs. Value Chain Monitoring
Copyright © 2006, Business Process Trends www.bptrends.com 107
The OMG’s Model Driven Architecture
Code
Computation-Independent Model
(CIM)
Platform-SpecificModel(PSM)
Platform-Independent Model
(PIM)
Created by BusinessAnalysts to Describe
Business
Created by Architect/Designer to Describe
Archtiecture
Created by Developer or Testerto Implement Solution
CIM >> PIMMapping
PIM >> PSMMapping
PSM >> CodeMapping
Copyright © 2006, Business Process Trends www.bptrends.com 108
The OMG’s BP Metamodels
UML 2.0 VariousBP ToolsBPMN
J2EE VariousBP ToolsBPEL
Business Process Definition MetamodelOntologyMetamodel
Business RulesMetamodel
XMI
MOFMeta Object
Facility
Copyright © 2006, Business Process Trends www.bptrends.com 109
BPEL
• The Business Process Execution Language (BPEL) – a BPMS engine (for EAI)
• Initially proposed by BEA, IBM, and Microsoft, it is currently being formalized by OASIS.
• It provides the basis for managing/integrating software for BPMS products.
• It doesn’t support integrating people into BPMS. • It is supported by several BPMS vendors• Open source versions are becoming available
Copyright © 2006, Business Process Trends www.bptrends.com 110
Market Consolidation
• 3-06 BEA (Middleware) buys Fuego (BPM engine)
• 12-05 Intalio (BPM Engine) buys FiveSight (BPEL)• 10-05 Metastorm (Workflow) merges with CommerceQuest (EAI)• 9-05 Fair Issac (Rules) buys RulesPower (Rules)• 7-05 Seagull Software (Middleware) buys Oak Grove Systems
(BPM engine)• 6-05 Sun (Middleware) buys SeeBeyond (EAI)• 4-05 TeleLogic (Modeling) buys Popkin (BP modeling)
• 6-04 Oracle (Packaged applications) buys Collaxa (BPEL)• 6-04 TIBCO (EAI) buys Staffware (Workflow)• 4-04 Adobe (Documents) buys Q-Link (Workflow)
• 9-02 IBM (Middleware) buys Holosofx (BP Modeling)
Copyright © 2006, Business Process Trends www.bptrends.com 111
Trends in Business Process Management
• The BPM Market Today• Level 1: Enterprise Level Trends• Level 2: Process Level Trends• Level 3: Implementation Level Trends• Where Do We Go Next?
Copyright © 2006, Business Process Trends www.bptrends.com 112
Why A Process-Centric Focus?
• Process is the cornerstone of an effective strategy• Processes are the most practical and effective way of
managing an organization• Process Management is the best response to rapid
change• In many companies Process Change Initiatives are out
of control• New requirements and techniques make Business
Process Management even more compelling
Copyright © 2006, Business Process Trends www.bptrends.com 113
New Slide: Uptake of BP Technologies
Innovators Early Adopters Early Majority Late Majority
Moore’sChasm
Companies that pursue new technologies
aggressively to gain early advantage
Companies that pursue new approaches
aggressively to gain early advantage
Companies that wait for a new
approach to prove itself and then move quickly
Companies that wait until the
new approach is well established and there is lots
of support
Many new approaches prove too difficult to use relative to their benefits and simply disappear
After Geoffrey A. Moore. Crossing the Chasm (HarperBusiness, 1991)
3 Gen BP
2 Gen BP
Copyright © 2006, Business Process Trends www.bptrends.com 114
Where Do You Start?
• There is no one right place to start• Some organizations have been working on process
change for years. Others are new to process management.
• Some have Six Sigma. Others have IT groups that are active in process redesign.
• Some work on projects and others work on enterprise-wide process management systems.
• You start from where you are at.• You start at the point where your senior
management is willing to begin.
Copyright © 2006, Business Process Trends www.bptrends.com 115
For More Information
• [email protected]– To contact me.
• www.bptrends.com– Monthly newsletter and a wide variety of white papers – more detail on everything I’ve discussed
Copyright © 2006, Business Process Trends www.bptrends.com 116
Books to Read
• Michael Porter on Competitive Advantage & Strategy (Completive Strategy, HBP, 1980; Competitive Advantage, HPR, 1985)
• Geary Rummler on Organization Mapping, the Organization as a System, and on Process Management & Measurement (Improving Performance, Jossy Bass, 1990; Serious Performance Consulting, ISPI, 2004)
• Roger Burlton on Stakeholder Analysis. (Business Process Management, SAMS, 2002)
• Peter Bolstorff on SCOR and the use of Frameworks (Supply Chain Excellence, AMACOM, 2003)
• Better, take a SCOR workshop (www.supply-chain.com) • Anything Joe Francis has published on BPM Groups and the use of
Frameworks (www.BPTrends.com column)• APQC BPM Benchmarking Reports • Paul Harmon on putting it all together (Business Process Change,
Morgan Kaufmann, 2003 and BPTrends articles)
Copyright © 2006, Business Process Trends www.bptrends.com 117
Copyright © 2006, Business Process Trends www.bptrends.com 118
Case Study: Boeing Airlift & Transit
• Boeing A&T has one of the most sophisticated integrated business process management systems in existence
• They started creating it in in 1993 and it took four years• In 1998 they won the US Government’s Baldrige Award
Copyright © 2006, Business Process Trends www.bptrends.com 119
Process Governance at Boeing A&T Group
HQ in Long Beach, CA
The Boeing Company
Connexionby
Boeing
CommercialAirplanes
DerivitivePrograms Advanced A&T
767 TankersProgramC-17 Program
Airlift andTanker
Programs
Air ForceSystems Boeing
CapitalCorporation
AirTraffic
Management
SharedServices
PhantomWorks
IntegratedDefenseSystems
Copyright © 2006, Business Process Trends www.bptrends.com 120
Boeing A&T Identified 300+ Processes
Create,Acquire &
GrowBusiness
IntegrateProduct/Service
Definition
ManageSuppliers
Produce Product
Support Products& Services
Define ProductionPlan
Provide Parts,Supplies, GFE &
Tools to Assembly
Assemble & DeliverProduct
Verify ProductionProcesses
Manage MaterialRqmts
Select Source
Negoitate & AwardPurchase Contracts
Manage SupplierQuality
Manage SupplierPerformance
Manage SupplyBase
Manage GovProperty
Manage Inventory
Define & ManageProduct/ServiceRequirements
Plan & ControlProduct Service
Design
ConcurrentlyDevelop Product/Service/Build-to/Buy-to/Support
Elements
Verify & ValidateProduct/Service
CreateOpportunities &New Markets
Acquire NewBusiness
Maintain/GrowExisting
Business
Provide SupplySupport
Provide FieldServices
Provide Retrofit &Modification
Services
ProvideInstructional
Systems Data &Training
Provide TechnicalData
Provide IntegratedSupport Planning &
Management
Provide SystemSupport Analysis
Provide SupportEquipment
Provide FinancialServices
Provide HumanResources
ProvideCommunicatins
Services
Provide Export/Import Compliance
Provide Safety,Health & Env.
Services
Provide LegalServices
Manage Facilities &Equipment
Provide IntegratedInformation
Systems & Services
Provide Enagling Infrastructure
Manage Non-Production
ProcurementProvide Flight
OperationsServices
Provide Security &Fire Protection
Services
Manage ProgramPlanning &Execution
AdministerContracts Minimize Program
Risk
Provide IntegratedPerformance Mang.(Cost & Schedule)
Manage IWAPerformance
Manage Programs
Boeing Airlift & Tanker Program: C-17 Program Value Chain
Ensure Integrationof Strategic Bus. &Functional Planning
EnsureOrganizationalEffectiveness
Perform IntegratedBus Financial
Mang.
Ensure CustomerSatisfaction
Perform Self-Governance Integrate & Deploy
Processes &Procedures Strengthen the
Team
Provide EthicsGuidance
Lead the EnterpriseCommunicatePositions &Directions
Ensure Quality &Mission Assurance
Insure ContiniousImprovement
Copyright © 2006, Business Process Trends www.bptrends.com 121
Creating A Process Governance System - 1
Define Value ChainsDefine Goals/
Measures for EachValue Chain
Identify Owner ofEach Value Chain
Process GovernanceCommittee
• Assume you have 4 value chains, that 4 value chain owners
Copyright © 2006, Business Process Trends www.bptrends.com 122
Creating A Process Governance System - 2
Define Value ChainsDefine Goals/
Measures for EachValue Chain
Identify Owner ofEach Value Chain
Define MajorProcesses in a Value
Chain
Define Goals/Measures for Each
Major Process
Identify Owner ofEach Major Process
Process GovernanceCommittee
Assume each valuechain has 8 major
processes, that's 32major process
owners.
Copyright © 2006, Business Process Trends www.bptrends.com 123
Creating A Process Governance System - 3
Define MajorSubProcesses in a
Value Chain
Define Goals/Measures for EachMajor SubProcess
Identify Owner ofEach MajorSubProcess
Assume each major process has8 subprocesses, that's 256
subprocess owners.
Define Value ChainsDefine Goals/
Measures for EachValue Chain
Identify Owner ofEach Value Chain
Define MajorProcesses in a Value
Chain
Define Goals/Measures for Each
Major Process
Identify Owner ofEach Major Process
Process GovernanceCommittee
Copyright © 2006, Business Process Trends www.bptrends.com 124
Each Boeing A&T Process Owner Defines a Process
W h oR espo n sib le
O rg an iza tion o r In div idu als
In put O utput
PR O C ESS FLO W C H AR TPR O C ESS FLO W C H AR T
M D -7148 (02 JUL 2004) R EV ISE D
E ST. T IM E
M a jo r T as ks fo r:P ro cess O w n er:
P rocess N u m b er:C reatio n D ate:R e vis io n D ate :
L E G EN DInpu t/O utpu tInpu t/O utpu t T askT ask a C onnecto r R RecordDec is ionDec is ion Control
P oin t
TO TA L T IM E
Applies T o:5.02
N e gotia te and A w ard P urch ase O rde r< P ro ce ss O w ne r N am e He re>
<B u s. U nit/P ro gram N am e H e re >
Pu rchaseR equisition
Supp lie rP roposa l
Technica lEva lua tion
C ost/P riceA na lysis
R eceiv eP urc hase
R eq uisition
Evalua tePurchase
Requis itio n
P roc urem en tCo m petitive ?
IssueU ndefinit ized
P urc hase O rd er
R eceive andE valuate
Prop osa l fro mSupp lier a nd
D evelo pN ego tia tion
P la n
S olicit a ndEvalua te B ids
fro m S upp lie rsand Selec t Supplier
N egotiateCon trac t
R equire m entsw ith Sup plier
N ego tia tio n P lanAdeq uate?
Procure m entFile C om p lia nt?
D eve lopProcure m ent Fileto R equir em e nts
IssueD efinitize d
Purchase O rder
a
a
b
b
3 .08.04 R elease Purchase R equisitions and W ork O rd ers
S u ppliers
P rogram E ngineer
C ost A na lyst
B uyer
Procurem en t M anagem en t
Procurem en t Advisor
PurchaseOrd er
P rocurem en tFile
Y
N Y
NYN
R
<O rig in D ate H ere><R ev isio n Da te H e re>
Copyright © 2006, Business Process Trends www.bptrends.com 125
Boeing Airlift & Transport Measures
ProcessPerformance
ProcessPerformance
Meet or ExceedCustomer
Expectations
Meet or ExceedCustomer
Expectations
AttainSuperiorBusinessResults
AttainSuperiorBusinessResults
QualityQuality
EfficiencyEfficiency
TimelinessTimeliness
CycleCycle--TimeTimeCycleCycle--TimeTime
Measure of conformance ornon-conformance (defects)to requirements or expectedperformance
Measure of success inmeeting a customercommitment
Measure of output that aprocess produces in relationto costs
Measure of time between acustomer request anddelivery of the product orservice to the customer
RequirementsRequirements Key Performance CategoriesKey Performance Categories
Copyright © 2006, Business Process Trends www.bptrends.com 126
Aligning External, Output Measures
Boeing A&T C-17Value Chain
CoreProcess 2
CoreProcess 3
CoreProcess 1
SubProcess 2.3(Customer of 2.2)
SubProcess 2.2(Supplier of 2.3)SubProcess 2.1
Inputs Outputs
Inputs
Boeing Suppliers The US Air Force
Copyright © 2006, Business Process Trends www.bptrends.com 127
Aligning External Measures With Contracts
Boeing A&T C-17Value Chain
CoreProcess 2
CoreProcess 3
CoreProcess 1
SubProcess 2.3(Customer of 2.2)
SubProcess 2.2(Supplier of 2.3)
SubProcess 2.1Inputs Outputs
Inputs
Boeing Suppliers The US Air Force
These Contracts Assure Vertical Alignment
These Contracts Assure Horizontal Alignment
Copyright © 2006, Business Process Trends www.bptrends.com 128
Boeing A&T Monthly Manager Feedback
Good Good100
90
80
70
60
50
40
30
20
10
Quality (1X)
100
90
80
70
60
50
40
30
20
10
Efficiency (1X)
Process Performance Assessment
Assessment Assessment
Perc
ent C
ompl
iant
Ord
ers
Com
plet
ed It
ems
per M
an-h
our
02 03 J F M A M J J A S O N DND ND 1 2 2 2 2 202 03 J F M A M J J A S O N DND ND 1 2 2 2 2 2
03 J F M A M J J A S O N D02ND ND 2 2 2 2 1 1
1.5 2.0 2.0 2.0 1.5 1.502 03 J F M A M J J A S O N DND ND
Copyright © 2006, Business Process Trends www.bptrends.com 129
Results of Boeing A&T Governance Effort
PerformanceFactor
*Days ahead of schedule to USAF decreased due to an insertion of four UK planes into the 2001 schedule
RONA
Milestones
Systems
Awards
DeliveryWaivers
COQ
Rework/Repair $
Span Time
Schedule
CPAR
5X
7.5X
17X
58% 67% 100% 92%
120AircraftDecison
LargestMulti-yearContract
Collier CalQED
100%
FlexSustainment
Daedalian
C32/C40
100%
Baldrige
80 50 17 12 8
4.3% 2.9% 2.5% 2.2% 1.9%
4.0M 2.5M 1.8M 1.4M 866K
100
4.2%
5.0M
442 Days 380 Days 374 Days 349 Days 286 Days
+10 Days +25 Days +40 Days +20 Days +60 Days
58%
2.31.6 2.9 3.3 3.4 4.11.7 4.2
100%
1.4%
6
268 Days
+100 Days
707K
15 C-17add-on
+60appropriation
18X
4.1
100%
1.4%
10
223 Days
+204 Days
644K
UK Order
31X
4.2
100%
1.1%
15
208 Days
+107 Days*
535K
UK1-4Deliveries
50X+
IW Finalist
'92 '93 '94 '95 '96 '97 '98 '99 '00 '01 KEY
7
6
5
4
3
2
1
0
Mal
colm
Bal
drig
e R
ange
7
6
5
4
3
2
1
0
Mal
colm
Bal
drig
e R
ange
Copyright © 2006, Business Process Trends www.bptrends.com 130