1. Marlon Dumas marlon.dumas ät ut . ee
MTAT Business Process Management (BPM) (for Masters of ETM) Lecture 3 Process Implementation & Monitoring
Marlon Dumas
marlon.dumas ät ut . ee

2. Agenda for Today Time Contents 10.00-11.30
Project Presentations (teams 1-6b)
Project presentations (teams 7-12)
Lunch break
Process Implementation and Monitoring
Exam Preparation

3. Business Process Lifecycle Management
Process identification
Process modelling (as-is)
Process analysis
Process improvement (to-be)
Process implementation
Process monitoring/controlling
In the following we will specify the process modelling task. Especially, we will understand the characteristics of a model, the difference between a meta and a reference model, and how the event-driven process chains (EPC) can be used to design process models. 3

4. Process Implementation

5. Harmon’s Process-centric Enterprise Architecture

6. Process Implementation
Organisational Change and Enablement
User Participation
User Training
Change Planning and Management
IT Implementation
Custom Software Application
In-house development
Outsourced
Packaged Enterprise System
Workflow Management System (WfMS / BPMS)

7. IT Implementation – Packaged Enterprise Systems
Typically classified into:
ERP: Enterprise Resource Planning, including
Manufacturing, inventory control, procurement, financials, human resources
SCM: Supply Chain Management, including
Material acquisition (forecasting, planning), logistics/transportation
Supplier relationship management
CRM: Customer Relationship Management
Marketing, lead management, sales
These functions may come together, or acquired separately
E.g. Salesforce (mainly CRM), SAP Business Suite, Oracle E-Business Suite, Microsoft Dynamics AX.

8. What is an ERP System?
Multi-module application that helps a company manage key parts of its business in an integrated fashion.
Key features include:
standardized environment with shared database independent of applications and integrated applications
enables information flow across organizational boundaries to support common transactions and business processes
intended to be customized for specific companies
database configuration
bolt-on software

9. On-Line Analytical Processing (Industry Specific Functions)
ERP System
Data Warehouse
Legacy
Systems
ERP System
On-Line Analytical Processing
(OLAP)
Bolt-On Applications
(Industry Specific Functions)
Suppliers
Customers
Core Functions [On-Line Transaction Processing (OLTP)]
Sales
&
Distribution
Business
Planning
Shop Floor
Control
Logistics
Operational Database
Customers, Production,
Vendor, Inventory, etc.
© Sumit Lodhia

10. Business Process Execution Engines
Big Vendors
Oracle SOA Suite
IBM Websphere Process Server
MS BizTalk
MS Windows Workflow Foundation
SAP NetWeaver BPM
Other closed-source
BizAgi
Savvion (Progress)
Metastorm BPM
TIBCO ActiveMatrix BPM
Commercial Open-Source
Intalio|BPM
Activiti
BonitaSoft
Community Open-Source
YAWL
Enhydra Shark
A lot of choice. In large commercial projects, the engines on the left column are an option, since upfront licensing costs can be absorbed either by a project, or more frequently, by multiple projects (BPM program). It is worth noting that Microsoft offers two options: BizTalk which has a large number of integration features (all sort of adapters and integration tools), and Windows Workflow Foundation, which is more geared towards smaller projects.
In smaller projects/companies, the other closed-source engines are an option. These compete with open-source solutions, among which we can clearly distinguish between commercial open-source (companies making revenue out of consultancy, training and branding), and community open-source.
In this course we well use YAWL for 3 reasons:
Very easy and relatively lightweight installation (both on Windows and Mac), and small footprint – Cf. YAWL4Study
Quite advanced resource management features, good for illustrating various ways of assigning tasks to actors
Freely available, no restriction

11. Danske Bank: Customer Package Process
Juni 2003
August 2003
October 2003
December 2003
Marts 2007
Introduction of Customer packages.
Word template to collect info
© Steen Brahe, Danske Bank

12. Danske Bank: Customer Package Process
Juni 2003
August 2003
October 2003
December 2003
Marts 2007
Backoffice group created
Handles the creation process
© Steen Brahe, 2007

13. Danske Bank: Customer Package Process
Juni 2003
August 2003
October 2003
December 2003
Marts 2007
Case Transfer System
Automatic validation and transfering
© Steen Brahe, 2007

14. Danske Bank: Customer Package Process
Juni 2003
August 2003
October 2003
December 2003
Marts 2007
Workflow enabled creation process v. 1
Automatic process control, 0% automated activities
© Steen Brahe, 2007

15. Danske Bank: Customer Package Process
Juni 2003
August 2003
October 2003
December 2003
Marts 2007
Workflow v. 6
80% automated activities
© Steen Brahe, 2007

16. Danske Bank – System Architecture
Executable Business Process A1 A3 A2 A4
WSDL A1
WSDL A2
WSDL A3
WSDL A4
Service Bus / Container
App1: COBOL
App2: PL1
App3: Java
App4: C#
© Steen Brahe, 2007

17. Process Monitoring & Controlling

18. Process Monitoring and Controlling
design
Process execution
(Re-)
implemen-
tiation
Monitoring & Controlling
Analysis
Strengths/ weaknesses
Process design
Imple- mentation
Process execution
© Michael zur Muehlen

19. Types of Process Monitoring
Runtime Monitoring (Business Activity Monitoring)
Viewing the load of the process
Identifying problematic cases
Identifying late cases (risk of missing deadlines), etc.
Post-mortem Monitoring (aka Business Process Analytics)
Performance KPIs: cycle times, resource utilization, error rates, …
Identification of bottlenecks
See for example:
BizAgi BAM:
Analytics:
For a long time “monitoring” was only known has measuring the performance of hardware (e.g. response time).
Organisational monitoring means the analysis of processes from an IT but also and especially from an organisational viewpoint.
With an efficient process monitoring it should be possible to answer
immediately to a customer request like “What is the current status of my order?”
What is my beginning to end cycle-time, system response-time, or system queue-time for each business process?
I want to improve my supply chain’s responsiveness to customer demands by reducing my “Order to Cash” cycle time by 10%. What specific business process areas and users do I need to improve and train to achieve this goal?
What are the slowest business process areas? How do today’s averages compare to the last months average?
Who are my slowest users for the transaction, “Create sales order”? How do their individual averages compare to our departments benchmark?
Is my system secure? Which users executed the payroll process today?
Based on these trends, Forrester and Gartner Group are both calling for a new kind of technology management at the process level: e-business process monitoring. The justification for this call is that in e-business environments, automatic interpretation and routing of online information about the status of business process execution will become routine, and messages automatically deriving from inside the company will seamlessly integrate with those from business partners.
Established online brands are already starting to integrate external services. Take the example of Sony Corp., which recently announced a new credit card, mileage program, and online bank. For the online Sony customer, the lines separating the different business divisions of Sony and its partnering bank are no longer visible. Thus, IT service management for such complex services has to guarantee the continuity of business processes regardless of the business unit or service partner performing the action. Only better communication and information integration can achieve this goal.

20. Process Monitoring: Dashboards
Process Cycle Time
of Order Processing
Process Frequency
of Order Processing
Process Cycle Time
of Order Processing
split up to different Plants
IDS (2003)

21. Beyond Monitoring – Process Mining
1) basic performance metrics
2) process model
3) organizational model
4) social network
5) performance characteristics
If …then …
6) auditing/security

22. Process Mining Tools ARIS Process Performance Manager
Percetive Software Reflect
Fujitsu Interstage (BPM Analytics)
ProM (open-source)

23. Process Mining – The ProM Framework

24. ProM Demo

25. Process Controlling Collation and analysis of runtime data
Comparison of actual- and target data
Active impact on current process execution as well as future process modeling (target)
Goal:
Improvement of an enterprise‘s adaptability to changes in the environment and in the enterprise itself
In addition to process monitoring data are aggregated within the process controlling task. This is the prerequisite for elaborated data analysis and the first step towards a process-oriented executive information system (EIS).

26. Process Controlling Establish Control Points Objective:
Establish a system for controlling the process and providing feedback to the people involved
Establish Control Points
Control points are activities such as
Inspection, verification, auditing, measuring, counting…
Usually considered business value adding
Without control points and a control system the only way of assessing process performance is customer feedback
The process ends up in a reactive mode
Poor quality is discovered too late
Location of control points is determined by
Criticality – impact on customer satisfaction
Feasibility – physically and economically possible
Laguna & Marklund

27. Process Controlling (cont.)
Develop and Implement Measurements
Involves answering the questions
What is to be measured and controlled?
What is currently measured (available data)?
Can a business case be made for a new measurement system?
What is an adequate sampling method, sampling size & frequency?
Five measurement categories: Measures of…
Response time (lead-time, cycle time)
Cost (Quality, PAF, internal and external failure costs)
Conformance (to given specifications)
Service levels (degree of availability, service reliability)
Repetition (frequency of recurring events such as rework)
Laguna & Marklund

28. What to Measure? The Balance Scorecard Framework
After Kaplan & Norton (1992)

29. Strategy Map: Capture a Cause Effect Relationship from the Bottom Up
More rapid and accessible services
Improved Returns on Investments
Stakeholder
Economic Model Process
Reduce Re-Activities thru ABC
Establish Web-Based Self Services
Internal Process
Expand Global Facility Reach
Leadership Development
Knowledge Management
Learning
& Growth
Facilities and Fixed Assets
Human Capital
IT Infrastructure
(Investments)
Financial

30. Examples of Measurements by Perspective
Stakeholder / Customer
Internal Processes
Current customer satisfaction level
Improvement in customer satisfaction
Customer retention rate
Frequency of customer contact by customer service
Average time to resolve a customer inquiry
Number of customer complaints
Number of unscheduled maintenance calls
Production time lost because of maintenance problems
Percentage of equipment maintained on schedule
Average number of monthly unscheduled outages
Mean time between failures
Learning and Growth
Financial / Investments
Percentage employee absenteeism
Hours of absenteeism
Job posting response rate
Personnel turnover rate
Ratio of acceptances to offers
Time to fill vacancy
% of facility assets fully funded for upgrading
% of IT infrastructure investments approved
# of new hire positions authorized for filling
% of required contracts awarded and in place
Here are some examples of performance measurements by balanced scorecard perspective.

31. Extend the Strategy Map with Measures, Targets and Initiatives
Stakeholder
Detailed statement of what is critical to successfully achieving the strategy
How success in achieving the strategy will be measured and tracked
The level of performance or rate of improvement needed
Key action programs required to achieve objectives
Faster Service Access
Self Service
Applications
Lean Processes
Objective
Description
Measure
Target
Initiative
Internal Process
Eliminate waste, reworks, and other errors in our processes
Number of Reworks
2 per setup per month each Outlet Office
Lean / Six Sigma
Process and Value
Map Analysis
Web Enable Technologies
L&G
Invest in IT
Investments

32. Alignment of Scorecard Components
Make sure the components of your scorecard fit together. We want to create a tight model for driving execution of your strategy.
Goal
Objective
Measurement
Target
Initiative
Achieve Agency operational efficiencies with best practices in the private sector
Reduce Operational Service Costs by 50% over the next 5 years
Cost per Outlet Office, Cost per Region, Cost per FTE
5% - Year 1
10% - Year 2
15% - Year 3
Activity Based Costing / Management
Reduce identified re-activities within primary processes by 80% over the next 3 years
Waste Volume Charts, Rework Tracking, Cycle Time End to End in S-LX (5 of 7 Regions)
Waste stream reductions of 5% each year, Reworks cut in half for next 3 years, cycle time cut by 75%
Lean / Six Sigma
Here is a basic example of how everything should connect and link up from goal to objective, objective to measurement, measurement to target, and finally, close the loop with an initiative to drive strategic execution upstream. We want a good solid, tight model where everything is aligned together.

33. Exercise CVS Case Study
Which performance measures is your to-be process intended to improve?
How would you monitor these performance measures?
How would you ensure that pharmacies are indeed applying the principles of the to-be process?

34. Reference Models Performance Measures in SCM
Overall Inventory Turns
Annual cost of goods sold (company info)  average total inventory
Raw Materials Inventory Turns (manufacturing companies only)
Annual cost of raw materials purchased (3)  average raw material inventory
Work-in-Process Inventory Turns (manufacturing companies only)
(Annual cost of raw materials purchased (3) + Annual cost of conversion (4))  average work in process inventory
Finished Goods Inventory Turns
Annual cost of goods sold (company info)  average finished goods inventory
Percentage of safety stock
Average safety stock  total inventory
Purchase order cycle time (in days for purchasing department and excludes supplier lead time)
Average amount of time (in days) elapsed from point of intention to place order to receipt of order by vendor
Supplier lead time
Average amount of time (in days) elapsed from point of order to delivery
Supplier on-time delivery
Percentage of orders supplier delivers on scheduled due date
Find more at:

35. Benchmarking: SCORcards
T. Gulledge & T. Chavusholu: “Automating the construction of supply chain key performance indicators”, Industrial Management & Data Systems, 2008.

36. Recap: The Layers of BPM Activities
BPM Setup
Strategic Alignment
BPM Governance
BPM Methodology
Process-aware Infom. Systems
Culture & People
Lean/ Six Sigma
Process Analysis
Process Identification
Process Modelling
Process Measurement
Process Improvement
Process Implementation
Process Configuration
Process Development
Process Training
Process Testing
Change Management
Process Execution and Controlling
Process Execution
Process Monitoring
Process Mining
Process Perform. Mgt.
Process Controlling

37. BPM’2012 in Tallinn 3-6 September 2012
200+ delegates from 40+ countries
12 specialized workshops (3 September)
3 keynotes, 25+ talks, 10+ demos (4-6 Sept.)
BPM Practitioners Day (6 September):
Case studies & experience reports
Tutorials (Social BPM, Predictive Analytics for BPM)

38. Readings
P. Harmon. Business Process Architecture and the Process-Centric Company, BPTrends Newsletter, March
P. Harmon. Business Processes at a New Company: What Do You Do First?. BPTrends Newsletter, October