Business Process Change and Discrete-Event Simulation: Bridging the Gap Vlatka Hlupic Brunel University Centre for Re-engineering Business Processes (REBUS) Department of Information Systems and Computing Uxbridge

CURRENT RESEARCH INTERESTS n Business process modelling (REBUS) n Business process change approaches n Simulation software evaluation and selection n Information systems n Knowledge management (Brunel Centre for Knowledge Management - BKMC)

THE STRUCTURE OF PRESENTATION n Introduction n The Business Process Paradigm n Business Process Modelling (BPM) n Suitability of Discrete-Event Simulation for BPM

n Discrete-event Simulation and Change Management Approaches n Awareness of Simulation Within the Business Community n Guidelines for a Wider Use of Simulation for BPM n Examples of BPM Projects Carried out Within the REBUS Centre n Conclusions

INTRODUCTION n The subject of managing innovation and change widely discussed in the business and management literature n A new management philosophy, method or technique (or fad) developed every few years n The main objective of each method is to improve business processes, reduce costs and provide better products and services to customers

n Failure rates of change management projects n Can simulation and business process modelling help?

THE BUSINESS PROCESS PARADIGM n Business process view n Numerous definitions exist in the literature n Common elements â Process â Process input â Process output

BUSINESS PROCESS MODELLING (BPM) n Numerous approaches, methodologies and tools n Process mapping tools - static view of processes n Some tools provide basic calculations of time components or process analysis

n Most of BPM tools - not able to do “what if” analysis and show dynamic change of business processes n One of the major problems that contribute to the failure of business process change (BPC) projects is a lack of tools for evaluating the effects of designed solutions before implementation n The role of discrete-event simulation tools

SUITABILITY OF DISCRETE- EVENT SIMULATION FOR BPM n Discrete-event simulation - a symbolic representation of processes in ways that can be: â Replayed â Dynamically analysed and â Reconfigured into alternative scenarios

n Simulation models can: â Dynamically model different parameter values such as arrival rates or service intervals â Incorporate the stochastic nature of business processes and the random behaviour of their resources â Capture the behaviour of both human and technical resources in the system  The visual interactive features of many simulation packages enable a graphical display of dynamic behaviour of model entities

n The flow of information within and between business processes can be modelled as the flow of temporary entities between processing stations n A simulation model can be easily modified to follow changes in the real system and as such can be used as a decision support tool for continuous process improvement n A simulation model of non-existing business processes can be developed and used for process design

Figure 1. The Process of Business Process Simulation

DISCRETE-EVENT SIMULATION AND CHANGE MANAGEMENT APPROACHES n Total Quality Management (TQM) n Just-In-Time (JIT) n Business Process Re-engineering (BPR) n Process Innovation n Knowledge Management

n These approaches offer solutions to ongoing business and managerial problems, but there are now many criticisms about the lack of their success n Simulation modelling - means by which business processes may be analysed and evaluated, prior to implementing large-scale change

n TQM Simulation models can: â Incorporate business activities undertaken by employees â Provide a graphical display of tasks undertaken by different workers, their duration and sequence, and dynamic changes of activities â Be used regularly as decision support tools for continuous improvement

n JIT â Real-time models of an integrated manufacturing system could incorporate models of inventory control systems, production design, resource planning and scheduling â Detailed models of inventory control systems can be used regularly to assess the impact of various JIT strategies, the inventory re-ordering policies, and optimal levels of inventory

n BPR Simulation models can be used for: â Determining business processes that needed to be radically changed â Investigating the impact of radical changes â Design of new processes

n Process Innovation Simulation models can be used: â To investigate key processes to determine innovation strategies â To develop a vision of new processes â To evaluate alternative models of new processes

n Knowledge Management Simulation models can be used: â To investigate knowledge management processes â To simulate missing data needed for knowledge management (e.g. MagentA) â To evaluate alternative models of knowledge management strategies

n A major difference between change management approaches in the context of simulation is that models that support TQM and JIT are usually manufacturing oriented (they tend to represent the flow of physical objects) n Models that support BPR and Process Innovation normally deal with the flow of information and how resources may be re deployed n These models are usually ‘people oriented’ as business processes normally involve human resources

n Models related to knowledge management mainly relate to information flow and storage, and could incorporate human resources and their involvement with knowledge management n Such models are not concerned with movements of physical objects within the system

Table 1. The role of simulation in supporting change management approaches

AWARENESS OF SIMULATION WITHIN THE BUSINESS COMMUNITY n There is a little evidence about the awareness of simulation within the business community n Relatively few publications on BPR and simulation are available

n Sessions related to BPR and simulation are mainly organised at simulation related conferences n Pro Sci’s 1997 benchmarking study â About 6% of companies studied used simulation software as process modelling tool â None of the 12 listed methodologies used for process design include dynamic modelling â None of 30 communication techniques used by the companies include visual models

n BPR training course n Simulation Study Group survey in 1997 (UK OR Society)

Table 2. The application areas of simulation - academic users

Table 3. The application areas of simulation - industrial users

GUIDELINES FOR A WIDER USE OF SIMULATION FOR BPM n More widespread teaching of simulation on business and management courses both at undergraduate and postgraduate level n Increasing the awareness of top management n Wide dissemination of information about successful BP simulation case studies

n Special journals on BP simulation n More books on BP simulation n Better business process simulation modelling tools n Systematic approach to dissemination of information about BP simulation at both national and international level

n Organising simulation awareness seminars and training courses within organisations in a systematic manner Further research in developing simulation theories, methods and software tools that will directly address requirements of business process modelling

EXAMPLES OF BPM PROJECTS CARRIED OUT WITHIN THE REBUS CENTRE n The REBUS Approach to Business Process Re- engineering n Integrating Simulation in Organisational Design Studies n Living Information Systems Development in the Context of Business Process Re-engineering

Investigating the Suitability of Petri Nets for Business Process Modelling n Change Management Approaches and Simulation Modelling n Business Process Modelling of a Telephony System n Business Process Modelling of a Help Desk

CONCLUSIONS n The potential benefits of using simulation for BPM are apparent n However, this potential of business process simulation is yet to be recognised by the business community

n The DTI sponsored study found that £300M could be saved by the British industry per year if simulation was more widely used within manufacturing industry n How much it could be saved by the business community? n Simulation modelling plays an important role in supporting change management approaches by providing continuity for change management in companies where the fads seem to come and go