Business Process

Management

Lecture 1
Introduction
1
Learning Objectives
• Understand key concepts of business processes, and the importance
of systematically managing such processes to improve organizational
performance

2
Content
Introduction to BPM
• Introduce the essential concepts behind BPM
• discuss the basic ingredients of a business process and provide a
definition of business process and BPM
• historical overview of the BPM discipline
• definition of a BPM lifecycle
• Exercise 1

3
 Issue
delivery Package
receipt Load products Issue
truck invoice

Prepare
shipment Schedule Check &
Schedule
payment confirm
delivery
PO
Unload
truck

Notify Obtain
shipment PO
confirm.
Match
Check Request incoming
Invoice PO change payment

4
Business processes
Assets & Organisation
Partners
Function A Function B Function C
(Sales) (Manufacturing) (Finance)
Financial

Business Process
Human
Resources

Business Process Customers

Technology
Business Process

Materials

5
 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

6
 A business process is…
a chain of events, activities and decisions
...involving several 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
• Issue-to-Resolution

7
 “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 minor
• Fault repaired but customer pays more intervention
than expected • Fault repaired, covered by warranty

Insurance
Call Centre Company
Technician

Customer Customer
Parts
Service Store
Dispatch
Centre

VALUE
issue-to-resolution process
8
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 9
Process performance
If you had to choose between two services, you would typically
choose the one that is:

• F…
• C…
• B…

10
Process performance
If you had to choose between two services, you would typically
choose the one that is:

• Faster
• Cheaper
• Better

11
Process performance
Three dimensions of process performance

• Time
• Cost
• Quality

12
 Improving process performance

Customer Greet & Take Bring Serve Present Issue Customer

arrived seat order menu meal bill invoice paid

13
 How would you improve this
process?
Outsource to Customer Standardize
Eliminate Cooking

Invest and Build

Re-sequence

Eliminate Waiters

14
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

15
Why BPM

16
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
Process identification steps
1. Designation step
• Enumerate main processes Process
• Determine process scope Architecture

2. Prioritization step (aka Process selection)

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

18
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
19
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

20
Example: prioritized process portfolio
Financial institution

Hig
Short-term action
h
Feasibility
Loan Ratin
g Low
controlling Contract
preparation Medium
Loan
decision Loan market High
Importance

evaluation
Handling
of Loan
payments planning
Loan
Lo application
w Poo Healt Goo
r
Possibl h Strategic d

e 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
Business process model
Invoice handling

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
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
Qualitative process analysis
Root-cause analysis example
Quantitative process analysis
Process simulation
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
Process redesign

AS-IS process model TO-BE process model

Cost

Time
Flexibility

Quality
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
Process implementation

Process Process change

automation management

Executable
Job redesign
process design

IT development
Training
& configuration

Performance
Testing
management plan

... ….
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
Process monitoring
Dashboards, alerts & reports

Event Model-based analytics (p. mining)

stream
DB logs
Course structure

Process
identification Week 3

Process Weeks 2 & 4

discovery

Process
Weeks 12-14 monitoring and
Gover- Process Weeks 5-7
Strategy nance analysis
controlling

Culture

Weeks 10-11 Process Process Weeks 8-9

implementation redesign
Further Readings & Resources

• Fundamentals of Business Process Management

• Chapter 1 – Introduction