Economic aspects of BPM PV207 Business Process Management Michal Krčál Department of Corporate Economics 22. 5. 2017 Today's content Q Getting to know each others Q BPM evolution and business management context Q Nowadays economy and enterprises Q Business Processes Q Break Q BPM is more than IT • BPM Life-cycle • Six Core Elements O Beyond BAM • Corporate Performance Management • Business Proces Optimization Q Summary Michal Krcäl (KPH ESF MU) Table of contents O Getting to know each others O BPM evolution and business ^ N I—________ . i ■ Michal Krcal (KPH ESF MU) Econom Introduction Assistant lecturer at the Department of Corporate Economics: Faculty of Economics and Administration Master degrees ► Applied Informatics (specialization: Information Systems) ► Business Administration Main teacher of Management Information System (Business Informatics) master programme Research: business value of information systems, reverse logistics, knowledge management Michal Krcäl (KPH ESF MU) Economic aspects of BPM 22. 5. 2017 4 / 47 My 10 years relationship with BPM • Met BPM at Fl • Participated on few seminars (and webinars) and workshops abroad • Consulted and graded modeling projects for 8 years and lectured BPM for 6 years • Did some non-commercial small business analysis projects • Doing one large commercial process analysis optimization project at Honeywell Michal Krcal (KPH ESF MU) Economic aspects of BPM 22. 5. 2017 5 / 47 Your background Do you know what business strategy is? Michal Krcäl (KPH ESF MU) Economic aspects of BPM 22. 5. 2017 6 / 47 Your background Do you know what business strategy is? Is dealing with business people easy? Michal Krcäl (KPH ESF MU) Economic aspects of BPM 22. 5. 2017 6 / 47 Your backaround • Do you know what business strategy is • Is dealing with business people easy? • How would you define BPM? Michal Krcäl (KPH ESF MU) Economic aspects of BPM Your background • Do you know what business strategy is? • Is dealing with business people easy? • How would you define BPM? • Who is usually right? Customer, consultant, coder... God? Michal Krcäl (KPH ESF MU) Economic aspects of BPM 22. 5. 2017 6 / 47 fable of contents Q BPM evolution and business management context N I Michal Krcäl (KPH ESF MU) Economic aspects of BPM 22.5.2017 7/47 Three waves of BPM First wave of BPM - F. Taylor's theory of management, 1920s Second wave of BPM - ERP systems, workflow, 1990s BPR - Don't automate, obliterate! ► Micheal Hammer: Reengineering Work: Don't Automate, Obliterate, Harvard Business Review, vol. 68, is. 4, 1990. Third wave of BPM - today's BPM - article Question - what is difference between supporting processes by ERP and by BPMS? Michal Krcal (KPH ESF MU) Economic aspects of BPM 22. 5. 2017 8 / 47 Three BPM traditions P. Harmon K Worte Simplification 1»D Business Management Quality Control, Six Sigma, Lean Fond-Con terci i o us Production LinE WW I- First Taylor -Scientific Management Production Compute™ BPM Information Technology \bphs PC GJdbalizdtiDn Interne! aooo Outsourcing a»H Fig. L An overview of approaches to business procesu change Michal Krčál (KPH ESF MU) 9/47 Management Tradition - business thing 1960S 2000S Porter's Value Chains > > Rummler-Brache Performance Improvement > Business Process Managern^ Rummler. Porter, Kaplan & Norton. Burllon ...HBR, ISPI, SCC Process Frameworks iCCP. CIBItX _atom)_/ Business Process Reerigineering > Fi ft. 6 The management tradition Business Process Architectures Michal Krcäl (KPH ESF MU) Economic aspects of BPM 22.5.2017 10/47 Quality Tradition - business thing The Scope and Evolution of Business Process Management 1980s 1990's 41 Total Quality Management (TQM) ^> Six Sigma > Lean Six Sigma > Shewhart. Demings, Juran. Ohno, Womack...ASQ, ISSSP Capaci ity Maturity V ocel s \ (CMMI, BPMM) / Fi^. 2 The quality control tradition Michal Krčál (KPH ESF MU) 11/47 IT Tradition - IT and business thing 50 P. Harmon 1930S 1990 S 3usiness Process Fteenginegring 2ÜÜQS > IT Architectures (Zachman) Enterprise Architectures (FEAF;^ -j: 'Lie: l red £; ft ware M Jl I": - olog ie:y> C A S E To; It > Business Process Modeling Tools OO Software MelhocologiBS ^> UML ^> B=MN Martin, Davenport. Hammer. Cnampy, Smitti & Fingar...BPMI. WfMC. OMG, NBA, Gartner tionN^ ln:egration (EAI) Workflow > BFM3 Packagad Software [EHP. CHM) Expert Systems > Business Rules Business Intelligence Fif;. 7 The inform alum technology Inidilion Michal Krcäl (KPH ESF MU) < □ ► < [SP ► < ► < -z ► -E ^0,0 Economic aspects of BPM 22. 5. 2017 12/ 47 Table of contents Q Nowadays economy and enterprises Michal Krcäl (KPH ESF MU) Economic aspects of BPM What's important about today's economy? Try brainstorming in groups of 4. Write as many features, characteristics and capabilities that are typical and important in nowadays economy. Michal Krcal (KPH ESF MU) Economic aspects of BPM 22. 5. 2017 14/ 47 What's important about today's economy? • Try brainstorming in groups of 4. Write as many features, characteristics and capabilities that are typical and important in nowadays economy. ► Globalization (on production and customer side) ► Entirely new business models (social networks, loT, Industry 4.0) ► Customer (super)centric ► Knowledge management ► Design - one purpose, short time ► Quality vs. fast innovation ► Frequency of innovations (competition - China, restless customers) Michal Krcal (KPH ESF MU) Economic aspects of BPM 22. 5. 2017 14/ 47 What's important about today's economy? • Try brainstorming in groups of 4. Write as many features, characteristics and capabilities that are typical and important in nowadays economy. ► Globalization (on production and customer side) ► Entirely new business models (social networks, loT, Industry 4.0) ► Customer (super)centric ► Knowledge management ► Design - one purpose, short time ► Quality vs. fast innovation ► Frequency of innovations (competition - China, restless customers) • How to manage this? • How to gain competitive advantage? Michal Krcal (KPH ESF MU) Economic aspects of BPM 22. 5. 2017 14/ 47 Typical (old) view of the company Functional Organizational Structure V f \ f Michal Krcäl (KPH ESF MU) Economic aspects of BPM Is it OK? Does this structure make sense? Functional Organizational Structure General Manager Finance Human ResoLirc es Research & Development Opera Michal Krcäl (KPH ESF MU) Economic aspects of BPM 22.5.2017 16/47 • Does this structure make sense? Yes, but... Michal Krcal (KPH ESF MU) Economic aspects of BPM 22. 5. 2017 16/ 47 • Does this structure make sense? Yes, but... • No interconnections between departments • No customer focus, no added value focus, Michal Krcal (KPH ESF MU) Economic aspects of BPM 22. 5. 2017 16/ 47 Does this structure make sense? Yes, but... No interconnections between departments No customer focus, no added value focus, Typical approach: cut, cut, cut (expenses) and locally increase productivity Michal Krcäl (KPH ESF MU) Economic aspects of BPM E -f) 22.5.2017 16/47 Process view on the company CEO Division Product Division Product Division Product R&D R&D R&D Marketing Marketing Marketing Finance Finance Finance Michal Krcäl (KPH ESF MU) Economic aspects of BPM < □ ► < Si ► Process view on the company CEO Division Product X Division Product Y Division Product Z R&D R&D R&D Marketing Marketing Marketing Finance Finance Finance Is this a solution? Michal Krcäl (KPH ESF MU) Economic aspects of BPM 22. 5. 2017 17/ 47 Why not? Michal Krcäl (KPH ESF MU) Economic aspects of BPM 22.5.2017 18/47 Why not? double activities Michal Krcal (KPH ESF MU) <□► < rS1 ► < ► E ^)0,O Economic aspects of BPM 22. 5. 2017 18/ 47 Why not? double activities fighting between process (product) departments Michal Krcäl (KPH ESF MU) Economic aspects of BPM 22.5.2017 18/47 Solution is in balance lutein Mfinngori ~| i I I :■ ■■ m 1 i c 3£ ;.. iiinifc f r- ■ Ii 1 ■■■■■■■■■ 1 ■ ■■ llllllblll ■Fl .'. ITH'..!.. „. ..... .... ..... ..... ..... .... ... ;■..( ■ L. linrjii I.1/. .u.1!. .... ..... ..... .... .... .... ..... ... Cu&tumci Focused No extreme is usually good. Michal Krcäl (KPH ESF MU) Economic aspects of BPM 22. 5. 2017 19/ 47 Solution is in balance lutein Mfinngorl ~| i I I :■ ■■ m 1 i c 3£ ;.. iiinifc f r- ■ Ii 1 ■■■■■■■■■ 1 ■ ■■ llllllblll ■Fl .'. ITH'..!.. „. ..... .... ..... ..... ..... .... ... ;■..( ■ L. ILa_--p WTi+'d linrjii I.1/. .u.1!. .... ..... ..... .... .... .... ..... ... Cu&tumci Focused No extreme is usually good. Any problems with this? Michal Krcäl (KPH ESF MU) Economic aspects of BPM 22. 5. 2017 19/ 47 Solution is in balance lutein Mfinngori ~| i I I :■ ■■ m 1 i c 3£ ;.. iiinifc f r- ■ Ii 1 ■■■■■■■■■ 1 ■ ■■ llllllblll ■Fl .'. ITH'..!.. „. ..... .... ..... ..... ..... .... ... ;■..( ■ L. linrjii I.1/. .u.1!. .... ..... ..... .... .... .... ..... ... Cu&tumci Focused No extreme is usually good. Any problems with this? Business Process Management is the way how to make the matrix work! Michal Krcäl (KPH ESF MU) Economic aspects of BPM 22. 5. 2017 19/ 47 fable of contents N I Q Business Processes Michal Krcäl (KPH ESF MU) Economic aspects of BPM 22.5.2017 20/47 BPM and IT ■■(definitions Km Ins- "http://www. omg. org/spec/BPNN/2&l@@524/M0DE ^process id- "processl" name- "processl "> name="Waroe" type="str "Fnrf">^/endEvent> "to usertask" sourceRef-"sta "ending" sourceRef-"usertask Michal Krcäl (KPH ESF MU) Economic aspects of BPM 22.5.2017 21 /47 BPM and business DILBERT __. .____ mm w j vscnrv is oufc new t| fPATTV ODüSKT^j" WOO TO I Dg ANYTHING-J f5«€ only kiows ^0 la TO 00 THINGS better j 1 fTOR EXAMPLE, THIS j POETIN« 15 fGQaJlV fAANAG^O BECAUSE. I voo KA^E. NO PROCESS (^ahd tw1s intern ogviou&ly hau no process for deciding u>hetker TO ATTEWQ-jg I A.b-iNQVlNG, /'"ALL IK FAVOR Gr getting mo of -iOV LASTED TUAKl TI^^V THE J "FACILITATOR." ■ '-M--- Michal Krcäl (KPH ESF MU) Economic aspects of BPM 22.5.2017 22/47 BPM and business order-to-cash; quote-to-order; procure-to-pay; issue-to-resolution; application-to-approval s (fl B I E Administrativ©, finance intrasiruclure Legal, atcynntiny. linancial managemeni Human resources management Personnel, lay recruitment, training, staff planning, etc. Product and technology development Produci and process design, production engineering, market testing. R&D Procurement Supplier managemeni, funding, subcontracting, specification INBOUND LOGISTICS Examples: Quality control: receiving; raw materials control: supply schedules OPERATION Examples: Manufacturing; packaging; production control; quality control; maintenance OUTBOUND LOGISTICS Examples: Finishing goods: order handling; dispatch; delivery: invoicing SALES & MARKETING Examples; Customer management; order taking: promotion; sales analysis; market research SERVICING Examples: Warranty; maintenance education and training upgrades Michal Krcäl (KPH ESF MU) <□► < rSi1 ► < -E ► < -E ► E -0 0,0 Economic aspects of BPM 22. 5. 2017 23/47 Clash of the worlds Business people usually don't care about technology IT people usually don't care about business value of technology Michal Krcal (KPH ESF MU) <□► < rS1 ► < ► -E -00,0 Economic aspects of BPM 22. 5. 2017 24/47 Clash of the worlds Business people usually don't care about technology IT people usually don't care about business value of technology They should know about the other one's world Michal Krcal (KPH ESF MU) Economic aspects of BPM 22. 5. 2017 24/47 Clash of the worlds Business people usually don't care about technology IT people usually don't care about business value of technology They should know about the other one's world You need a facilitator -> process analyst = bridge between IT and business Michal Krcal (KPH ESF MU) Economic aspects of BPM 22. 5. 2017 24/47 fable of contents N I Q Break Michal Krcäl (KPH ESF MU) Economic aspects of BPM 22.5.2017 25/47 Q&A and discussion 15 minutes for coffee or discussion, your choice © Michal Krcal (KPH ESF MU) Economic aspects of BPM 22. 5. 2017 26/47 Table of contents N I Q BPM is more than IT • BPM Life-cycle • Six Core Elements Michal Krcäl (KPH ESF MU) Economic aspects of BPM 22.5.2017 27/47 Where is your place? What is Business Process Management • Understand Source of Performance Gap Design vs. Execution Set Performance Target Develop Intervention Plan I r Find and Fix Execution Problem Improve Design Measure Process Performance Understand Customer Needs and Benchmark Competitors ; Modify Design L I Replace Measure Results Ensure Process Compliance í J Design. Document, and Implement Process Zdroj: (Brocke and Rosemann 2014), Weske's Business Process Lifecycle 1 Introduction Evaluation: Pre-Mss Mining Business Activity Monrtof ing Enactment: Operation Monitoring Maintenance Enactment Evaluation Administration and Stakeholders Design & Analysis ] Configuration ^ Design: Rutins** Prr:r.F=.* Identification and Modeling Analysis: Validation Simulation Verification Configuration: Sv3ten Selection Im pie mental inn Test ana Dcploy^t-i-i Fi£- 1.5. Business process lifecycle Michal Krcäl (KPH ESF MU) Economic aspects of BPM 22. 5. 2017 29/47 Another Life-cycles Design/Model First step - to identify processes or to design them ► learn about the reality (company) ► establish the scope of the project ► establish common understanding Michal Krčál (KPH ESF MU) Economic aspects of BPM 22. 5. 2017 31 / 47 Design/Model • First step - to identify processes or to design them. ► learn about the reality (company) ► establish the scope of the project ► establish common understanding • In order to gather data about processes you have to ► Interview people ► Observe ► Study documents etc. Michal Krčál (KPH ESF MU) Economic aspects of BPM 22. 5. 2017 31 / 47 Design/Model First step - to identify processes or to design them. ► learn about the reality (company) ► establish the scope of the project ► establish common understanding In order to gather data about processes you have to ► Interview people ► Observe ► Study documents etc. Business people (from customer side) heavily involved. ► You need to persuade (show) them that process analysis is for their benefit. Michal Krcal (KPH ESF MU) Economic aspects of BPM 22. 5. 2017 31 / 47 Design/Model First step - to identify processes or to design them. ► learn about the reality (company) ► establish the scope of the project ► establish common understanding In order to gather data about processes you have to ► Interview people ► Observe ► Study documents etc. Business people (from customer side) heavily involved. ► You need to persuade (show) them that process analysis is for their benefit. ► Or at least to "give a damn" Michal Krcal (KPH ESF MU) Economic aspects of BPM 22. 5. 2017 31 / 47 Design/Model First step - to identify processes or to design them. ► learn about the reality (company) ► establish the scope of the project ► establish common understanding In order to gather data about processes you have to ► Interview people ► Observe ► Study documents etc. Business people (from customer side) heavily involved. ► You need to persuade (show) them that process analysis is for their benefit. ► Or at least to "give a damn" Michal Krcal (KPH ESF MU) Economic aspects of BPM 22. 5. 2017 31 / 47 Implement/Execute Your thing! Michal Krcal (KPH ESF MU) Economic aspects of BPM 22. 5. 2017 32/47 Monitor/Control/Analyse • You need data about processes - in BPM the source is BPMS • Usually Key Performance Indicators (KPIs) and various metrics are defined and monitored. ► If you cannot measure it, you cannot manage it... • Examples of KPIs or metrics? Michal Krcäl (KPH ESF MU) <□► < rS1 ► < ► -E -O <\ O Economic aspects of BPM 22. 5. 2017 33/47 Monitor/Control/Analyse • You need data about processes - in BPM the source is BPMS • Usually Key Performance Indicators (KPIs) and various metrics are defined and monitored. ► If you cannot measure it, you cannot manage it... • Examples of KPIs or metrics? • Making reports about process performance. Michal Krcäl (KPH ESF MU) Economic aspects of BPM 22. 5. 2017 33/47 Monitor/Control/Analyse • You need data about processes - in BPM the source is BPMS • Usually Key Performance Indicators (KPIs) and various metrics are defined and monitored. ► If you cannot measure it, you cannot manage it... • Examples of KPIs or metrics? • Making reports about process performance. • Analyze and management exceptions and process efficiency. Michal Krcäl (KPH ESF MU) Economic aspects of BPM 22. 5. 2017 33/47 Optimize/Improve When you have data, you know, if something is wrong and needs fixing. Monitor/Control phase generates the input for optimizing. Michal Krcal (KPH ESF MU) Economic aspects of BPM 22. 5. 2017 34/47 Optimize/Improve When you have data, you know, if something is wrong and needs fixing. Monitor/Control phase generates the input for optimizing. What is the most valuable sources (what kind of processes) for process optimization? Michal Krcal (KPH ESF MU) Economic aspects of BPM 22. 5. 2017 34/47 Optimize/Improve When you have data, you know, if something is wrong and needs fixing. Monitor/Control phase generates the input for optimizing. What is the most valuable sources (what kind of processes) for process optimization? Different scenarios are simulated and business rules are changed. Michal Krcal (KPH ESF MU) Economic aspects of BPM 22. 5. 2017 34/47 Optimize/Improve When you have data, you know, if something is wrong and needs fixing. Monitor/Control phase generates the input for optimizing. What is the most valuable sources (what kind of processes) for process optimization? Different scenarios are simulated and business rules are changed. Economical and operational impacts of different scenarios are assessed. Michal Krcal (KPH ESF MU) Economic aspects of BPM 22. 5. 2017 34/47 The Six Core Elements of Business Process Management Michal Krcäl (KPH ESF MU) Economic aspects of BPM 22.5.2017 35/47 The Six Core Elements of Business Process Management O Strategic Alignment O Governance O Methods O Information Technology Q People O Culture • The framework to be identified has to comprehensively structure those elements of BPM that need to be addressed when following a holistic understanding of BPM, i.e., BPM as an organizational capability and not just as the execution of the tasks along a process lifecycle (identify, model, analyze, improve, implement, execute, monitor, and change). <□► < rS1 ► < ^ ► < ^ ► 1 -O <\ O Michal Krcal (KPH ESF MU) Economic aspects of BPM 22. 5. 2017 35/47 Capability Areas 0 Strategic Alignment Information Technology I People .1____\\ Culture Process Improvement Planning Strategy & Process Capability Linkage Enterprise Process Architecture Process Measures Process Customers & Stakeholders Process Management Decision Making Process Roles and Responsibilities Process Metrics & Performance Linkage Process Related Standards Process Management Compliance hi ess Design & Modelling I Process Monitoring & Control Process Design & Modelling Process Implementation Execution Process Implementation & Execution Process Skills & Expertise Process Management Knowledge Process Improvement & Innovation Pr !_! Process Monitoring & Control Process Improvements Innovation I Process Education Ion I rocess Program & Project Management Process Program & Project Management Process Collaboration Process Management Leaders Responsiveness to Process Change Process Values & Beliefs Process Attitudes & Behaviors Leadership Attenti on to Process Process Management Social Networks J a o -I o a : ■d : - ■ CT it) V) Michal Krcäl (KPH ESF MU) Economic aspects of BPM 22.5.2017 36/47 The Six Core Elements of Business Process Management - in detail Michal Krcäl (KPH ESF MU) Economic aspects of BPM 22.5.2017 37/47 The Six Core Elements of Business Process Management - in detail O Strategic Alignment Michal Krcäl (KPH ESF MU) Economic aspects of BPM 22.5.2017 37/47 The Six Core Elements of Business Process Management - in detail O Strategic Alignment ► When something does not fit the strategy, it is wrong. Michal Krcäl (KPH ESF MU) Economic aspects of BPM The Six Core Elements of Business Process Management - in detail O Strategic Alignment ► When something does not fit the strategy, it is wrong. ► Which processes to improve should be derived from strategy. The Six Core Elements of Business Process Management - in detail O Strategic Alignment ► When something does not fit the strategy, it is wrong. ► Which processes to improve should be derived from strategy. ► Enterprise Process Architecture and Strategy Maps. Michal Krcäl (KPH ESF MU) Economic aspects of BPM 22. 5. 2017 37/47 The Six Core Elements of Business Process Management - in detail Strategic Alignment ► When something does not fit the strategy, it is wrong. ► Which processes to improve should be derived from strategy. ► Enterprise Process Architecture and Strategy Maps. ► Stakeholders of BPM (processes) are very important. O Governance The Six Core Elements of Business Process Management - in detail Strategic Alignment ► When something does not fit the strategy, it is wrong. ► Which processes to improve should be derived from strategy. ► Enterprise Process Architecture and Strategy Maps. ► Stakeholders of BPM (processes) are very important. O Governance ► 'Day-to-day' work on BPM = operative decision-making perspective. The Six Core Elements of Business Process Management - in detail Strategic Alignment ► When something does not fit the strategy, it is wrong. ► Which processes to improve should be derived from strategy. ► Enterprise Process Architecture and Strategy Maps. ► Stakeholders of BPM (processes) are very important. Governance ► 'Day-to-day' work on BPM = operative decision-making perspective. ► Collecting metrics. Methods Michal Krcäl (KPH ESF MU) Economic aspects of BPM 22. 5. 2017 37/47 The Six Core Elements of Business Process Management - in detail Strategic Alignment ► When something does not fit the strategy, it is wrong. ► Which processes to improve should be derived from strategy. ► Enterprise Process Architecture and Strategy Maps. ► Stakeholders of BPM (processes) are very important. Governance ► 'Day-to-day' work on BPM = operative decision-making perspective. ► Collecting metrics. Methods ► Tools and techniques to make things work. Michal Krcäl (KPH ESF MU) <□► < rS1 ► < ► -E -00,0 Economic aspects of BPM 22. 5. 2017 37/47 The Six Core Elements of Business Process Management - in detail Strategic Alignment ► When something does not fit the strategy, it is wrong. ► Which processes to improve should be derived from strategy. ► Enterprise Process Architecture and Strategy Maps. ► Stakeholders of BPM (processes) are very important. Governance ► 'Day-to-day' work on BPM = operative decision-making perspective. ► Collecting metrics. Methods ► Tools and techniques to make things work. ► 'Compatible with lifecycle' Michal Krcäl (KPH ESF MU) Economic aspects of BPM 22. 5. 2017 37/47 The Six Core Elements of Business Process Management - in detail Strategic Alignment ► When something does not fit the strategy, it is wrong. ► Which processes to improve should be derived from strategy. ► Enterprise Process Architecture and Strategy Maps. ► Stakeholders of BPM (processes) are very important. O Governance ► 'Day-to-day' work on BPM = operative decision-making perspective. ► Collecting metrics. O Methods ► Tools and techniques to make things work. ► 'Compatible with lifecycle' O Information Technology Q People The Six Core Elements of Business Process Management - in detail Strategic Alignment ► When something does not fit the strategy, it is wrong. ► Which processes to improve should be derived from strategy. ► Enterprise Process Architecture and Strategy Maps. ► Stakeholders of BPM (processes) are very important. Governance ► 'Day-to-day' work on BPM = operative decision-making perspective. ► Collecting metrics. Methods ► Tools and techniques to make things work. ► 'Compatible with lifecycle' O Information Technology O People ► People are the core element of BPM. Michal Krcäl (KPH ESF MU) Economic aspects of BPM 22.5.2017 37/47 The Six Core Elements of Business Process Management - in detail Strategic Alignment ► When something does not fit the strategy, it is wrong. ► Which processes to improve should be derived from strategy ► Enterprise Process Architecture and Strategy Maps. ► Stakeholders of BPM (processes) are very important. Governance ► 'Day-to-day' work on BPM = operative decision-making perspective. ► Collecting metrics. Methods ► Tools and techniques to make things work. ► 'Compatible with lifecycle' O Information Technology O People ► People are the core element of BPM. O Culture Michal Krcäl (KPH ESF MU) Economic aspects of BPM 22.5.2017 37/47 The Six Core Elements of Business Process Management - in detail O Strategic Alignment ► When something does not fit the strategy, it is wrong. ► Which processes to improve should be derived from strategy. ► Enterprise Process Architecture and Strategy Maps. ► Stakeholders of BPM (processes) are very important. O Governance ► 'Day-to-day' work on BPM = operative decision-making perspective. ► Collecting metrics. O Methods ► Tools and techniques to make things work. ► 'Compatible with lifecycle' O Information Technology O People ► People are the core element of BPM. O Culture ► The 'softest' part of BPM (management in general). < □ ► < rS1 ► < ► -E -00,0 Michal Krcäl (KPH ESF MU) Economic aspects of BPM 22. 5. 2017 37/47 The Six Core Elements of Business Process Management - in detail O Strategic Alignment ► When something does not fit the strategy, it is wrong. ► Which processes to improve should be derived from strategy. ► Enterprise Process Architecture and Strategy Maps. ► Stakeholders of BPM (processes) are very important. O Governance ► 'Day-to-day' work on BPM = operative decision-making perspective. ► Collecting metrics. O Methods ► Tools and techniques to make things work. ► 'Compatible with lifecycle' O Information Technology O People ► People are the core element of BPM. O Culture ► The 'softest' part of BPM (management in general). Michal Krcäl (KPH ESF MU) Economic aspects of BPM 22. 5. 2017 37/47 fable of contents • E O Beyond BAM • Corporate Performance Management • Business Proces Optimization Michal Krcäl (KPH ESF MU) Economic aspects of BPM What Business Activity Monitoring is for? HI.......... Mb |Ht4 : "J 11" • Any ideas? Michal Krcäl (KPH ESF MU) Economic aspects of BPM 22. 5. 2017 39/47 • Any ideas? • Management is about control and making decisions • BAM can be used for ► Corporate Performance Management - BSC, ABC ► Process Optimization - (Lean) Six Sigma, TOC Michal Krcäl (KPH ESF MU) Economic aspects of BPM 22. 5. 2017 39/47 Activity-based costing Costs are divided into activities We know what does business process cost Useful for optimization BPMS or another part of IS should enable this Michal Krcal (KPH ESF MU) Economic aspects of BPM 22. 5. 2017 40/47 Balance Scorecard Strategic framework for KPI Customer To achieve our vision, how should we appear to our customers?" > O 4» o Measures o 1- Initiatives Financial To succeed financially, how should we appear to our shareholders?" Objectives Measures 4» Q Initiatives 1 Vision and Strategy T Learning and Growth 1 To achieve our vision, how will we sustain our ability to change and improve?" Objectives Measures 4» a Initiatives Internal Business Processes To satisfy our shareholders and customers, what business processes must we excel at?" Objectives Measures 4» 1- Initiatives Michal Krcäl (KPH ESF MU) Economic aspects of BPM 22. 5. 2017 41 /47 Lean Six Sigma • DMAIC = define, measure, analyze, improve, control Michal Krcal (KPH ESF MU) Economic aspects of BPM 22. 5. 2017 42/47 Lean Six Sigma DMAIC = define, measure, analyze, improve, control Areas Under the Normal Curve 99.99% Mean ± Six Sigma Figure 5: UCL LCL Control Chart Upper Control Limit (UCL) Lower Control Limit (LCL| I I M I I I I I I I I I I I I M M I I I M I I I I Michal Krčál (KPH ESF MU) Economic aspects of BPM 22.5.2017 42/47 Lean - 7 wastes MUDA is *he Japanese word fop WASTE. An 8th waste |tli is the wasted J| potential of people Sack it out and get rid Over Processing \ I)Processing beyond the standard required by the customer. OVGrDPOClUCtiOn produce sooner, faster or in greater quantities than customer demand Inventory Rework Raw material work in progress or finished goods which is not having value added to it. Non right first time. Repetition or correction of a process. Waiting Transportation L Unnecessary movement of people , or parts between processes. Copyright TE 2010 People or parts that wait for a work cycle to be completed. Unnecessary movement of people, parts or machines within a process. SourCG: Michal Krcäl (KPH ESF MU) Economic aspects of BPM 22.5.2017 43/47 Theory of Constraints TOC in nutshell Michal Krcal (KPH ESF MU) <□► < rS1 ► < ► -E -00,0 Economic aspects of BPM 22. 5. 2017 44/47 Theory of Constraints TOC in nutshell The system is as strong as the weakest link in chain Michal Krcal (KPH ESF MU) Economic aspects of BPM 22. 5. 2017 44/47 Theory of Constraints TOC in nutshell The system is as strong as the weakest link in chain The flow of the system is based on the bottom neck Michal Krcal (KPH ESF MU) Economic aspects of BPM 22. 5. 2017 44/47 fable of contents N I Q Summary Michal Krcäl (KPH ESF MU) Economic aspects of BPM 22.5.2017 45/47 Summary What to take from today ► BPM is not only IT, although it exists because of IT Michal Krcal (KPH ESF MU) <□► < rS1 ► < ► -E -00,0 Economic aspects of BPM 22. 5. 2017 46/47 Summary What to take from today ► BPM is not only IT, although it exists because of IT ► At some point, you will probably have to face business people Michal Krcal (KPH ESF MU) Economic aspects of BPM 22. 5. 2017 46/47 Summary What to take from today ► BPM is not only IT, although it exists because of IT ► At some point, you will probably have to face business people ► It could be studied as regular study programme (University of Lichtenstein) Michal Krcal (KPH ESF MU) Economic aspects of BPM 22. 5. 2017 46/47 Summary What to take from today ► BPM is not only IT, although it exists because of IT ► At some point, you will probably have to face business people ► It could be studied as regular study programme (University of Lichtenstein) More about business process analysis MPHBUPM Business Process Management (autumn semester). Michal Krcal (KPH ESF MU) Economic aspects of BPM 22. 5. 2017 46/47 Q&A Michal Krcäl (KPH ESF MU) Economic aspects of BPM 22.5.2017 47/47