MTAT.03.

231
Business Process Management

Lecture 1 – Introduction

Marlon Dumas

marlon.dumas ät ut . ee

1
About this course

Objective
• To introduce the discipline of modeling, analyzing, automating and
monitoring business processes.

Related courses
• Enterprise System Integration
• Integrating applications to automate or support business
processes
• Business Analysis and Software Product Management
• Identifying and analyzing business problems and opportunities
that can be addressed via IT solutions, including business process
improvement opportunities
• Data mining / Business data analytics
• Mining business process execution logs
2
 Readings and resources

• Textbook
• Dumas, La Rosa, Mendling & Reijers: Fundamentals of Business
Process Management (second edition), Springer 2018
What is a Business
Process?

4
 Issue
delivery Package
receipt Load products Issue
truck invoice

Prepare
shipment Schedule Schedule
payment Check &
delivery
confirm
PO
Unload
truck
Notify
shipment
Obtain
PO
confirm.
Match
Check incoming
Request
Invoice payment
PO change

5
 Serve
Load meal
dish-
washer

Bring
menu
Take
Collect order
Collect payment
laundry Unload
Brush
dish-
grills
washer
Collect
laundry
Clean
kitchen Greet &
Sweep surfaces
Present & mop seat
bill

6
 Business processes

Assets & Organisation

Partners
Function A Function B Function C
Financial

Human
Business Process
Resources
Business Process Customers
Technology
Business Process
Materials

7
 Check &
PO Package Load Notify Issue Match Payment
confirm
received products truck shipment invoice payment made
PO

Obtain Issue
PO Schedule Unload Check Schedule Goods
PO delivery
issued delivery truck invoice payment arrived
confirm. receipt

8
Customer Greet & Take Bring Serve Present Issue Customer
arrived seat order menu meal bill invoice paid

Load Clean Unload

Kitchen Brush Collect Sweep Kitchen
dish- kitchen dish-
is dirty grills laundry & mop is clean
washer surfaces washer

9
A business process is…
a chain of events, activities and decisions
...involving a number of actors and objects,
….triggered by a need
and leading to an outcome that is of value to a customer.

Examples:
• Order-to-Cash
• Procure-to-Pay (aka Purchase-to-Pay)
• Application-to-Approval
• Fault-to-Resolution

10
 “My washing machine doesn’t work…”
Negative outcomes (value-reducing): Positive outcomes (value-adding):
• Fault not repaired in a timely manner • Fault repaired immediately with
• Fault repaired but customer pays minor intervention
more than expected • Fault repaired, covered by warranty

Call Centre Insurance

Technician Company

Customer Customer
Parts
Service Store
Dispatch
Centre

VALUE
fault-to-resolution process
11
 Your turn

• Think of an organization and a process in this organization:

• Is it order-to-cash, procure-to-pay, fault-to-resolution…
• Who is/are the customer(s)?
• What value does this process deliver to its customer?
• Who are the key actors of the process?
• List at least 3 outcomes of the process.

12
 What is Business
Process Management?

And why should I care

about it?

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 Improving Performance (Rummler’s Framework)
Business Environment
Economy Regulatory Culture

Assets & Organisation

Resources
Performance Planning Performance Management Stakeholders
Financial

Value
Human Function A Function B Function C
Resources
Business Process
Technology
Business Process Customers
Materials
Business Process

Competitors
14
Process performance

If you had to choose between two services, you would

typically choose the one that is:

• Faster
• Cheaper
• Better
Process performance

Three dimensions of process performance

• Time
• Cost
• Quality
 Improving process performance

Customer Greet & Take Bring Serve Present Issue Customer

arrived seat order menu meal bill invoice paid

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 How would you improve this process?
Outsource to Customer Standardize
Eliminate Cooking

Automate

Invest and Build

Re-sequence

Eliminate Waiters

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Business Process Management (BPM)
Body of principles, methods and tools to design, analyze,
execute and monitor business processes, with the aim of
improving their performance.

IT systems
Customers Employees

Business
Processes
Data Trading
Partners

IT infrastructure Suppliers

19
Why BPM?

“The first rule of any technology used in a business

is that automation applied to an efficient operation
will magnify the efficiency.

The second is that automation applied to an

inefficient operation will magnify the inefficiency.”
Bill Gates
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In other words…

Information Yields
Technology Business
Value

Enables
Yields
Process
Change

Index Group (1982)

21
Why BPM

22
How to go about BPM?

23
The BPM lifecycle

Process
identification

Process
Process architecture
architecture

Conformance
Conformance and
and Process As-is
As-is process
process
performance
performance insights
insights discovery model
model

Process
monitoring and Process
controlling analysis

Executable
Executable Insights
Insights on
on
process
process weaknesses
weaknesses and
and
model
model their
their impact
impact

Process Process
implementation To-be
To-be process
process redesign
model
model

24
Process identification steps

1. Designation step
• Enumerate main processes Process
Architecture
• Determine process scope

2. Prioritization step (aka Process selection)

Prioritize processes based on:
Prioritized
• Importance Process
• Health Portfolio
• Feasibility

After Davenport (1993)

Example: process architecture
Wholesaler

Strategic
Management

Logistics Suppliers
Management Management
Warehouse Demand
Management Management
Management processes

Direct
Sales Distribution
procurement

Marketing Service
Core processes
Indirect
Finance IT HR
procurement
Support processes
Prioritization (aka Process Selection)

1. Importance
Which processes have greatest impact on the organization‘s strategic
objectives?
2. Health (or Dysfunction)
Which processes are in deepest trouble?
3. Feasibility
Which processes are most susceptible to successful process
management?

Prioritized process portfolio

Hammer, Champy (1993)

Example: prioritized process portfolio
Financial institution

Short-term action
High Feasibility
Loan Rating
Low
controlling Contract
preparation Medium
Loan
decision Loan market High
Importance

evaluation
Handling of
payments Loan
planning
Loan
application
Low
Poor Health Good
Possible Strategic fit?
The BPM lifecycle

Process
identification

Process
Process architecture
architecture

Conformance
Conformance and
and Process As-is
As-is process
process
performance
performance insights
insights discovery model
model

Process
monitoring and Process
controlling analysis

Executable
Executable Insights
Insights on
on
process
process weaknesses
weaknesses and
and
model
model their
their impact
impact

Process Process
implementation To-be
To-be process
process redesign
model
model

29
 Business process model
Invoice handling example

Finance ERP Invoice Report Invoice

Department
Enter Check
no
Invoice Invoice Post Invoice
mismatches
Invoice Details Mismatches
Invoice
received posted

Invoice DB Invoice
Senior Finance Officer
mismatch Block
exists Invoice
Invoice
blocked

30
The BPM lifecycle

Process
identification

Process
Process architecture
architecture

Conformance
Conformance and
and Process As-is
As-is process
process
performance
performance insights
insights discovery model
model

Process
monitoring and Process
controlling analysis

Executable
Executable Insights
Insights on
on
process
process weaknesses
weaknesses and
and
model
model their
their impact
impact

Process Process
implementation To-be
To-be process
process redesign
model
model

31
Qualitative process analysis
Root-cause analysis example

32
Quantitative process analysis
Process simulation example

33
The BPM lifecycle

Process
identification

Process
Process architecture
architecture

Conformance
Conformance and
and Process As-is
As-is process
process
performance
performance insights
insights discovery model
model

Process
monitoring and Process
controlling analysis

Executable
Executable Insights
Insights on
on
process
process weaknesses
weaknesses and
and
model
model their
their impact
impact

Process Process
implementation To-be
To-be process
process redesign
model
model

34
Process redesign

AS-IS process model TO-BE process model

Cost

Time
Flexibility

Quality
35
The Process Redesign Orbit
The BPM lifecycle

Process
identification

Process
Process architecture
architecture

Conformance
Conformance and
and Process As-is
As-is process
process
performance
performance insights
insights discovery model
model

Process
monitoring and Process
controlling analysis

Executable
Executable Insights
Insights on
on
process
process weaknesses
weaknesses and
and
model
model their
their impact
impact

Process Process
implementation To-be
To-be process
process redesign
model
model

37
Process implementation

Process Process change

automation management

Executable
Job redesign
process design

IT development
Training
& configuration

Performance
Testing management
plan

... ….
38
The BPM lifecycle

Process
identification

Process
Process architecture
architecture

Conformance
Conformance and
and Process As-is
As-is process
process
performance
performance insights
insights discovery model
model

Process
monitoring and Process
controlling analysis

Executable
Executable Insights
Insights on
on
process
process weaknesses
weaknesses and
and
model
model their
their impact
impact

Process Process
implementation To-be
To-be process
process redesign
model
model

39
Process monitoring
Dashboards, alerts & reports

Event Model-based analytics (p. mining)

stream
DB logs

40
Next Week

Strategic
Management

Logistics Suppliers
Management Management
Process Identification
Warehouse Demand
Management Management
Management processes

Direct
Sales Distribution
procurement

Marketing Service
Core processes
Indirect
Finance IT HR
procurement
Support processes 42