Transcript Process

MTAT.03.231
Business Process Management (BPM)
Lecture 1: Introduction
Marlon Dumas
marlon.dumas ät ut . ee
About This Course
Objective:
– To introduce the concept of “business process” and
the discipline of modeling, analyzing, automating and
monitoring business processes.
The course relates to:
– Enterprise System Integration
• Integrating applications to automate or support business
processes
– Data mining
• Mining business process execution logs
– Software Economics
• Business case analysis: Benefit assessment of IT projects
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Structure of the course
• 14 lectures covering:
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Principles of BPM
Process Modeling Using BPMN
Process Analysis (Qualitative and Quantitative)
Process Automation
Process Monitoring and Mining
• 14 practice sessions
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Practice coordinator: Fabrizio Maggi
Intro to Process Modeling
Process Analysis & Re-design
Process Automation using Business Process Management Systems
Process Monitoring and Mining (ProM)
• Team Project
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Grading
• Six assignments (25 points in total)
– See course web page
– 8-12 hours per homework, ≈ 60 hours in total
• Project (25 points) – to be released on 15 April
– ≈ 40 hours
• Exam (50 points)
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Readings and Resources
• Course material posted on course Web page
– http://courses.cs.ut.ee/2014/bpm
• Textbook
– Dumas, La Rosa, Mendling & Reijers: Fundamentals of Business
Process Management, Springer 2013
– You can download chapters or whole book if inside the university
network (see link in “Readings” section of web site)
• Message board (for questions)
– http://www.quicktopic.com/50/H/zd6WnDQtT9f
– Please subscribe using the “Get email” button!
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Introduction to Business Process
Management
Marlon Dumas
What is a (Business) Process?
Collection of related events, activities and
decisions, that involve a number of actors and
resources, and that collectively lead to an outcome
that is of value to an organization or its customers.
Examples:
•
•
•
•
•
Order-to-Cash
Procure-to-Pay
Application-to-Approval
Claim-to-Settlement
Fault-to-Resolution (Issue-to-Resolution)
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“My washing machine won’t work!”
Warranty?
Call Centre
Technician
Customer
Customer
fault-report-to-resolution process
© Michael Rosemann
VALUE
Service
Dispatch
Parts
Store
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Processes and Outcomes
• Every process leads to one or several outcomes,
positive or negative
– Positive outcomes deliver value
– Negative outcomes reduce value
• Fault-to-resolution process
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–
–
–
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Fault repaired without technician intervention
Fault repaired with minor technician intervention
Fault repaired and fully covered by warranty
Fault repaired and partly covered by warranty
Fault repaired but not covered by warranty
Fault not repaired (customer withdrew request)
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What is a Business Process: Recap
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“If it does not make at least three
people mad, it’s not a process.”
Hammer and Stanton (1995)
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http://www.kimtracey.co.za/
Your turn
• Think of an organization and a process in this
organization:
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–
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Is it order-to-cash, procure-to-pay, fault-to-resolution…
Who is/are the customer(s)?
What value does this process deliver to its customer?
Who are the key actors of the process?
List at least 3 outcomes of the process.
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BPM: What is it?
Body of principles, methods and tools to design,
analyze, execute and monitor business processes
In this course, we will focus on BPM based on
process models.
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Why BPM?
“The first rule of any technology used in a business
is that automation applied to an efficient operation
will magnify the efficiency.
The second is that automation applied to an
inefficient operation will magnify the inefficiency.”
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Bill Gates
In other words…
Information
Technology
Yields
Business
Value
Enables
Yields
Process
Change
Index Group (1982)
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The Ford Case Study (Hammer 1990)
Ford needed to review its procurement process to:
• Do it cheaper (cut costs)
• Do it faster (reduce turnaround times)
• Do it better (reduce error rates)
Accounts payable in North America alone employed
> 500 people and turnaround times for processing
POs and invoices was in the order of weeks
Michael Hammer. “Reengineering Work: Don’t Automate, Obliterate”
Harvard Business Review, July 1990
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The Ford Case Study
• Automation would bring some improvement
(20% improvement)
• But Ford decided not to do it… Why?
a) Because at the time, the technology needed to
automate the process was not yet available.
b) Because nobody at Ford knew how to develop the
technology needed to automate the process.
c) Because there were not enough computers and
computer-literate employees at Ford.
d) None of the above
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The correct answer is …
Mazda’s Accounts Payable Department
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How the process worked? (“as is”)
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How the process worked? (“as is”)
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How the process worked? (“as is”)
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How the process worked? (“as is”)
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How the process worked? (“as is”)
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How the process worked? (“as is”)
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Reengineering Process (“to be”)
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Reengineering Process (“to be”)
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Reengineering Process (“to be”)
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Reengineering Process (“to be”)
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Reengineering Process (“to be”)
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Reengineering Process (“to be”)
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The result…
• 75% reduction in head count
• Material control is simpler and financial
information is more accurate
• Purchase requisition is faster
• Less overdue payments
 Why automate something we don’t need to do?
Automate things that need to be done.
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Principles of Business Process
Reengineering (BPR)
1. Capture information once and at the source
2. Subsume information-processing work into the
real work that produces the information
3. Have those who use the output of the process
drive the process
4. Treat geographically dispersed resources as if
they were centralized
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Exercise: Claims Handling at an
Insurance Company
• Claims handling for replacement of
automobile glass
• Under the existing process the client may
have to wait 1-2 weeks before being able
to replace the damaged auto glass
 Goal – A radical overhaul and of the
process to shorten the client waiting time
© Laguna & Marklund
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Existing claims process
Request additional information
Pay
Notify incident
Client
Give instructions
File claim
Claims
handling
center
Request quote
Provide quote
Pay
© Laguna & Marklund
Approved
glass
vendor
Automate vs Redesign
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Existing claims process
1.
2.
3.
4.
5.
Client notifies insurance company of an incident. She is given a
claims form and told to obtain a cost estimate (quote) from a local
glass vendor. Client submits form and quote.
When the claims form is completed the local agent verifies the
information and forwards the claim to a regional processing center.
The insurance claims handling center receives the claim (on paper)
and enters the data into a claims handling system. The claim is
checked by a claims handler.
a) If the claims handler is satisfied with the claim it is passed along
to several others in the processing chain and eventually a bank
transfer is made to the customer.
b) If there are problems with the claim the handler mails it back to
the client for necessary corrections.
When the client receives the payment she can go to the local glass
vendor and replace the glass (or they can do it before at their risk).
© Laguna & Marklund
Automate vs Redesign
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How to engage in BPM?
The BPM Lifecycle
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Phase 1: Process Identification
“Most businesses have just three core processes:
1. Sell stuff
2. Deliver stuff
3. Making sure you have stuff to sell and deliver”
Geary Rummler
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Core vs Support Processes (Porter)
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Process Architecture
Core processes
Support processes
Management processes
Quote handling
Product delivery
Invoice handling
Detailed quote
handling process
Not covered in this course
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Phase 2: Process Discovery
More in Lectures 2-3
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Phase 3: Analysis
Qualitative analysis
• Root-cause analysis
• PICK charts
• Issue register
Quantitative Analysis
• Flow analysis
• Queuing analysis
• Process simulation
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Qualitative Analysis
Identify and eliminate waste
• Valued-added analysis
Identify, understand and prioritize issues
• Issue register
• Root-cause analysis (e.g. cause-effect diagrams)
• Pareto analysis
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Eliminating Waste
"All we are doing is looking at the time line, from
the moment the customer gives us an order to
the point when we collect the cash.
And we are reducing the time line by reducing
the non-value-adding wastes ”
Taiichi Ohno
More in Lecture 4
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Quantitative Analysis:
Performance Measures
Cost
Time
Quality
Cost per
execution
Cycle time
Error rates
Resource
utilization
Waiting
time
SLA
violations
Waste
Non-valueadding
time
Customer
feedback
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Simulation / What-If Analysis
10 applications per hour
Poisson arrival process (negative
exponential)
Receive info
Request info
No
0.3
0.5
Deliver card
accept
Check for
completeness
Start
Notify acceptance
Yes
Perform checks
Make decision
0.7
complete?
Decide
0.8
End
reject
0.5
Notify rejection
Time out
review request
reviiew
Receive review
request
0.2
Task
Role
Execution Time (mean, dev.)
Receive application
system
0
0
Check completeness
Clerk
30 mins
10 mins
Perform checks
Clerk
2 hours
1 hour
Request info
system
1 min
0
…
…
…
…
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Simulation output: KPIs
Resource
Utilization
Cost
Resource
100.00%
4,500.00
$ 4,260.95
90.00%
4,000.00
80.00%
3,500.00
70.00%
3,000.00
60.00%
2,500.00
50.00%
2,000.00
40.00%
Cycle Time - Histogram
50.34%
12
10
1,500.00
30.00%
500.00
10.00%
$ 898.458
18.82%
# PI's
1,000.00
20.00%
285.00
$5.04%
6
4
0.00
0.00%
Clerk
Clerk
System
System
Manager
Manager
2
0
0
10
20
30
40
50
60
Days
More in Lectures 5-6
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Phase 4: Process Redesign
Continuous Process Improvement (CPI)
• Does not put into question the current process
structure
• Seeks to identify issues and resolve them
incrementally, one step at a time
Business Process Re-Engineering (BPR)
• Puts into question the fundamental assumptions and
principles of the existing process structure
• Aims to achieve breakthrough, for example by
removing costly tasks that do not directly add value
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The Devil’s Quadrangle
Costs
Time
Flexibility
Quality
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Redesign Heuristics
1. Task elimination
2. Task composition
3. Triage
4. Resequencing
5. Parallelism
6. Process specialization and
standardization
7. Resource optimization
8. Communication optimization
9. Automation
Each heuristics improves one side of the devil’s
quadrangle, generally to the detriment of others
More in Lecture 7
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Phase 5. When technology Kicks in..
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Business Process Management Systems
Other
closed-source
Big vendors
• IBM BPM
• Oracle BPMS
• Microsoft BizTalk,
WWF
• SAP NetWeaver
BPM
• Software AG
webMethods
• Pagaystems
PegaRULES
•
•
•
•
•
Appian BPMS
BizAgi BPM Suite
Bosch inubit Suite
OpenText BPM
Perceptive
BPMONe
• Progress Savvion
• TIBCO ActiveMatrix
BPM
Commercial
open-source
• Bonita Open
Solution
• Camunda Fox
• Intalio|BPM
• JBoss jBPM
More in Lectures 8-10
Community
open-source
• Shark
• YAWL
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Phase 6 – Process Monitoring
2) process model
3) organizational model
4) social network
Start
Register order
Prepare
shipment
(Re)send bill
Ship goods
Contact
customer
Receive payment
Archive order
End
1) basic performance
metrics
5) performance
characteristics
6) auditing/security
If …then …
More in Lectures 11-13
© www.processmining.org
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Next Week
Introduction to Process Modeling
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