1. Graduate Program in Business Information Systems BIS 581 Business Process Management Lecture - 7 Aslı Sencer Department of Management Information Systems 1

2. Business Process Management– 7 Management of the BPM Processes 2

3. Business Process Management “BPM is the achievement of organization’s objectives through the improvement, management and control of essential business processes”. Achievement: Realizing the strategic objectives as outlined in the organizations’ strategic plan Organization: Refers to an enterprise or parts of an enterprise; a discrete business unit. Objectives: Range from strategic goals of the organization to the individual process goals. BPM is not an objective in itself; rather a means to achieving an objective. Improvement: Making the business processes more efficient, effective and flexible. Management: Performance management of the process and people. Control: Managing the end-to-end business processes that involves full cycle of Plan-Do-Check-Act. 3

4. A Brief History of BPM The idea that work can be viewed as a process and improved is hardly new. In early 1900’s Frederick Taylor developed industrial engineering and process improvement in manual labor and production processes. Shewart, Deming, Juran and others introduced statistical process control. It involved measuring and limiting process variation, continuous improvement, empowerment of workers to improve their own processes. – Total quality management (TQM) at Toyota Production System – Lean manufacturing in American firms Late 1990’s: Enterprise Resource Planning (ERP) systems introduced organizational focus, but did not solve an organization’s process issues like efficiency and effectiveness. Late 1990’s and early 2000’s: Customer Relationship Management (CRM) was introduced with extensive focus on the customer view. This provided focus on the front office but did not improve the back office processes. 4

5. A Brief History of BPM (cont’d.) 1980’s and 1990’s: Six-Sigma approach created by Motorola and popularized by GE. Six Sigma seeks to improve the quality of process outputs by identifying and removing the causes of defects and minimizing variability in manufacturing and business processes. A six sigma process is the one in which 99.99966% of the products manufactured are statistically expected to be free of defects. Late 1980’s: Lean manufacturing: The core idea is to maximize customer value while minimizing waste. Simply, lean means creating more value for customers with fewer resources. 1990’s: Business process reengineering was promoted by Hammer and Champy (Harward Business Review article: “Don’t automate, obliterate”) and applied by western firms during economic recession and strong global competition. Process management focus moved to non-production, white collar processes like order management and customer service. BPR introduced – The radical redesign and improvement of work – Attacking broad, cross functional processes – Stretch goals of order of magnitude improvement – Use of IT as an enabler of new ways of working. 5

6. Questions About BPM Is technology an essential part of BPM? – In the right circumstances and when it can be justified. Are process modeling and management tools useful for achieving process improvements in non technology circumstances? – It is difficult to complete complex process improvement projects in time without the use of these tools 6

7. Role of BPM Tools There is a danger of organizations believing that once they have purchased a process modeling tool, it will solve all their problems and process improvements will just follow. Actually a BPM tool is a software; without a modeling methodology or framework, skilled resources to use it and a genuine commitment from organizational leadership, it is useless. 7

8. How is BPM conceived by the involved parties? Currently BPM is used by Some vendors who only focus on the technology solution of process improvement Other vendors who think of BPM as business process modeling or business performance management Some consultants who use BPM to continue their message on business process reengineering Some managers who want to jump on the BPM bandwagon, with no idea where it is going Some process analysts who use BPM to inflate their process modeling aspirations 8

9. BPM is More than just a software More than just improving and reengineering your processes - it also deals with managerial issues. Not just hype - it is an integral part of management More than just modeling - it is also about the implementation and execution of these processes, which requires analysis. 9

10. BPM is NOT Just process reengineering Based on perceptions – it uses real data Focused on a component – it has an holistic approach An individual task – includes all staff in the organization A departmental task – includes all departments in the organization 10

11. The Iceberg Sendrome Perceptions 1/10 Reality 9/10 The success of the real implementation and achievement of the business benefits depend on the organizational change management and control of the impacts on the people. Theoretical analysis which takes quite a long time is the small portion of the iceberg. Fear/courage Cultural differences Sympathy/Antipathy Tabus Unwritten rules Conflicts of benefits Resistance to change Irrational behaviors 11

12. Forms of Resistance to Change There are four different types of resistance: Reject the problem: There is no such problem! Reject the significance of the problem: There is a problem but it can be ignored! Reject the solvability of the problem: There is a problem, it is significant, but has no solution! Reject his role in the solution of the problem: There is a problem, it is significant, it has solution, but I do not have the authority to solve it. 12

13. The Main Component of BPM- People The success of BPM will be approved by humans involved in the process BPM should be transparent Continuous empowerment should be provided Poeple should be convinced about the possible benefits Responsibilities should be clear Feedebacks should be taken regularly and taken care of. 13 “We had improvement programs, but the real difference came when we decided it was no longer a program, it was a business strategy.” Stephen Schwarts- IBM

14. INNOV8: IBM BPM Simulation Game The INNOV8 BPM simulation game brings IT and business together for process model innovation. Both IT and business professionals understand that processes are critical to success. They just look at them from different perspectives. INNOV8, the IBM Business Process Management (BPM) simulation game, gives both IT and business players a better understanding of how effective BPM impacts an entire business ecosystem. INNOV8 also demonstrates how a more instrumented, interconnected and intelligent world supports process improvements and working smarter to help build a smarter planet. 14

15. INNOV8: BPM Simulation Game Inside INNOV8 Online, you will encounter three different game scenarios: – Smarter Traffic : Evaluate existing traffic patterns and re-route traffic based on incoming metrics. – Smarter Customer Service: Using a call center environment, players develop more efficient ways to respond to customers. – Smarter Supply Chains: Evaluate a traditional supply chain model, balance supply and demand and reduce environmental impact. Players quickly see how practical process improvements can help meet profitability, customer satisfaction and environmental goals while addressing real problems faced by municipalities and businesses today. And when they're done playing, they can compare scores with other players on global scoreboards. Players observe the impact of practical process modifications on the profitability, customer staisfaction and environmental goals. 15

16. INNOV8: BPM Simulation Game Smarter Supply Chains 16

17. Group Exercise: INNOV8 Enter www.ibm.com/innov8 and click Get ready to play INNOV8 onlinewww.ibm.com/innov8Get ready to play INNOV8 online Choose Smart Supply Chains gameSmart Supply Chains You should note all your decisions and your performances regarding your goals. After making three simulated trials you will select the best decision and continue to the next step. 17