Introduction to Business Process Reengineering

Introduction The need for process improvement Process improvement methodologies TQM, Lean, CMMI, Six Sigma

Process Improvement (Origins) Process improvement and project management started with some very large projects and finding better ways to manage them Shipbuilding Large scale engineering

The Need for Process Improvement Business and technology changes over time and process must reflect those changes Look at the impact of the mobile phone on businesses Companies improve processes to Become more efficient (share data, communicate across the enterprise)

Process Ownership Different employees (stakeholders) has a stake in one or more processes There should be one individual or group who is responsible for a process (process owner) The process owner should be responsible for the improvement of the owned process

Process Improvement (Introduction) It’s about making processes better It’s not about fighting fires It’s not about blaming someone for inadequate existing processes It’s a problem solving approach (there are various approaches) to fix what’s broken

Process Improvement (Goals) Reduce variation Remove activities that contribute no value Improve customer satisfaction Eliminate waste of money, people, materials, time Improve safety and ergonomics

Common Process Improvement Questions What processes should be improved? What resources are needed to improve those processes? How can we set understand those processes we are trying to improve? How can the improved process be institutionalized?

General Process Improvement (Steps) Balanced Scorecard The following are summarized from the document http://www.balancedscorecard.org/Portals/0/PDF/bpihndbk.pdf

General Process Improvement (Steps) Select the process to be improved and how it will be improved Clear metrics should be defined These are often customer-centric It’s best to start small and define clear process boundaries Pareto charts or diagrams are a form of bar graph with which to analyze frequency of problems or causes in a process

General Process Improvement (Steps)

General Process Improvement (Steps) Example Simplify a process Removing an unnecessary form Quantify expected labor and paper savings

General Process Improvement (Steps) Define the team that will improve the process It’s important to select the right people who have time The team should have a clear level of authority and a team leader Consider team size Larger teams (8-10) tend to have difficulty reaching consensus and achieving objectives Define resources needed by the team

General Process Improvement (Steps) Fully define the existing process Reverse engineer the process using a tool such as BPMN The team should be clear that the flowchart is accurate Beware of cross-functional processes

General Process Improvement (Steps) Define the simplified process Remove redundant or unnecessary activities

General Process Improvement (Steps) Collect baseline data on the existing process Time to execute the process Amount of material waste Use this data to judge efficacy of the improved process

General Process Improvement (Steps) Assess process stability Does the process have exceptions? What are those exceptions A run chart is a line plotted over time A control chart is a graph used to study how a process changes over time Used to look at process variation

Control Chart (Example) Shows max, min, mean, and goal values over time

Control Chart (Outcomes) Look at the root causes of variation and try to remove if Was the root cause temporary in nature

General Process Improvement (Steps) We do this after the process is “stabilized” Is the process capable Are there unusual pattern in the data? Can it be further improved? Are the data points within the specification limits If not, the process is not capable Look to ways to remove process exceptions

General Process Improvement (Steps) If necessary, identify root causes of why a process is not stable and capable Change process redesign, as necessary This can be iterative

General Process Improvement (Steps) Plan and implement the process change

General Process Improvement (Steps) Collect new performance data and compare with baseline data Did the process improve as expected? Did we improve process stability (exceptions)? Did we improve process capability (efficiency)? Do the data collection metrics need to be changed Assess feasibility of further improvements

General Process Improvement (Steps)

CMMI (Introduction) The Capability Maturity Model Integration approach is a way of assessing the strengths and weaknesses of existing processes for the purpose of improving them It’s a set of best practices (framework) to improving processes It’s a way of getting your customers what they want

CMMI (Introduction) CMMI is a model for improving process but is not a process itself It’s managed by the CMMI institute at cmmiinstitute.com It’s origins are in Industry Government Academia

CMMI (History)

CMMI (Process Capability Levels) CMMI defines capability levels and maturity levels – as the name implies Capability Level 0: process is not performed or partially performed Level 1: process is performed Level 2: process is managed Level 3: process is fully standardized and documented (defined)

CMMI (Process Maturity Levels) Level 1 – Initial Processes are ad hoc and chaotic Characterized by a tendency to overcommit Level 2 – Managed Business understands its processes Processes are periodically monitored Level 3 – Defined Processes are well-characterized and understood and improve over time

CMMI (Process Maturity Levels) Level 4 – Quantitatively managed Quantitative objectives are established for quality and process performances Process performance is predictable Level 5 – Optimizing Characterized by continuous improvement based on quantitative metrics

CMMI Taxonomy CMMI calls them constellations CMMI for Acquisition CMMI for Development CMMI for Service Plus the People Capability Maturity Model (People CMM) to help manage workforce http://cmmiinstitute.com/cmmi-solutions/

CMMI Process Areas Solutions are organized process areas (types) 16 core processes And specialized processes for Acquisition Development Services

CMMI Process Areas (Core) (I HAVE NOT LISTED THEM ALL) Configuration Management (CM) (software) Maintain the integrity of work products using configuration identification, configuration control, configuration status accounting, and configuration audits Version control, document control, build management, release control

CMMI Process Areas (Core) Integrated Project Management (IPM) Produce and maintain the project planning Project monitoring and control Quantitative project management Percentage of defects removed by software testing activities, for example

CMMI Process Areas (Core) Measurement and Analysis (MA) As mentioned, what we measure is what we get Measurement objectives Reduce time to delivery Reduce total lifecycle cost Deliver specified functionality completely Improve prior levels of quality Improve prior customer satisfaction ratings Maintain and improve the acquirer/supplier relationships

CMMI Process Areas (Core) Organizational process definition (OPD Organizational performance management (OPM) Organizational Training (OT) Organizational Process Focus (OPF)

CMMI Process Areas (Core) Process and Product Quality Assurance Object evaluation processes, work products and services Evaluation reports Noncompliance reports Corrective actions Establish records Evaluation logs, QA reports, reports of quality trends

CMMI Process Areas (Core) Requirements management (for projects) Managing all changes to the requirements Maintaining the relationships among the requirements, the project plans, and the work products Identifying inconsistencies among the requirements, the project plans, and the work products Taking corrective action Risk management

CMMI Process Areas (Acquisition) Acquisition Requirements Development (ARD) Solicitation and Supplier Agreement Development (SSAD) Agreement Management (AM) Acquisition Technical Management (ATM) Acquisition Verification (AVER) Acquisition Validation (AVAL)

CMMI Process Areas (Development) Product integration Technical solutions

CMMI Process Areas (Services) Incident prevention and resolution Service continuity and delivery Service transition Strategic service management

Six Sigma (Introduction) Using standard measurement techniques (statistical techniques) to measure operational performance Motorola (Engineer Bill Smith was given credit for it in 1984) Further developed at Texas Instruments Adopted by General Electric, in 1995 A central focus of GE’s business

Six Sigma (Objectives) Improve quality of process outputs by identifying and removing errors (defects) Minimize variability in business processes and manufacturing Uses a set of quality management methods (statistical) and create method experts

Six Sigma (Methodology) 3.4 defects per million opportunities There is a methodology to again this goal Define, Measure, Analyze, Improve, Control (DMAIC) Defects per million opportunities (DPMO)

Six Sigma (Example)

Six Sigma (Features) Focus on measureable and quantifiable financial returns Emphasis on strong leadership and passionate management Special infrastructure Master black belt, black belt, green belt, red belt Decision-making based on verifiable data No assumptions or guesswork

Six Sigma (Methodologies) DMAIC (duh-may-ick) Use to improve existing business processes DMADV (duh-mad-vee) Use to create new product or process designs

Six Sigma (DMAIC) Define the problem Measure key aspects of the process and collect relevant data Analysis the data Understand cause-and-effect relationships Improve or optimize the current process Control deviations

Six Sigma (DMADV) Define design goals Measure characteristics critical to quality Analyze and develop design alternatives Design details and optimize the design Verify the design Set up pilot runs Implement the production process

ISO 9001 A set of process and quality management standards https://www.bsigroup.com/Documents/iso-9001/resources/BSI-ISO-9001-implementation-guide.pdf A good overview

ISO 9000 Principles Customer focus Leadership Involvement of people Process approach System approach to management Continual improvement Quantitative (factual) approach to decision making