Economic aspects of BPM PV207 Business Process Management Michal Krčál Department of Corporate Economics 25. 4. 2019 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 professor at the Department of Corporate Economics, Faculty of Economics and Administration • Ph.D. research: Information Business Value (of Corporate portals) • 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 25.4.2019 4/51 My 12 years relationship with BPM • Met BPM at Fl • Participated in few seminars (and webinars) and workshops abroad • Consulted and graded modeling projects for 10 years and lectured (business) BPM for 8 years • Did some non-commercial small business analysis projects • Did one large commercial process analysis optimization project at Honeywell Michal Krcal (KPH ESF MU) Economic aspects of BPM 25.4.2019 5/51 Your background Do you know what business strategy is? Michal Krcal (KPH ESF MU) Economic aspects of BPM 25.4.2019 6/51 Your background Do you know what business strategy is? Is dealing with business people easy? Michal Krcal (KPH ESF MU) Economic aspects of BPM 25.4.2019 6/51 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 Krcal (KPH ESF MU) Economic aspects of BPM 25.4.2019 6/51 fable of contents Q BPM evolution and business management context N I Michal Krcäl (KPH ESF MU) Economic aspects of BPM 25.4.2019 7/51 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 25.4.2019 8/51 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? ► code vs. model ► programmer vs. administrator Michal Krcal (KPH ESF MU) Economic aspects of BPM 25.4.2019 8/51 Three BPM traditions P. Harmon K Worte Simplification 1»D Business Management Qjality Control, Six Sigma, Lean Ford-Chi terci i o us Production LinE WW I- First Taylor -Scientific Management PrrxluctiHi Compute™ BPM Information Technology \bphs PC GlubaJizdtiDn Interne! aooo Outsourcing 200H Fig. L An overview of approaches to business procesu change Michal Krčál (KPH ESF MU) <□► < rS1 ► < ± > < -ž ► -š •OQkO Economic aspects of BPM 25.4.2019 9/51 Management Tradition - business thing 1960S 2000S Porter's Value Chains > > Rummler-Brache Pertormarice Improvement > Business Process Managern^ Rummler. Porter, Kaplan & Norton. Burllon ...HBR, ISP I, SCC Process Frameworks iCCP. CIBItX _ATOM)_/ Business Process Fteerigineering > Fi ft. 6 The management tradition Business Process Architectures Michal Krcäl (KPH ESF MU) Economic aspects of BPM 25.4.2019 10/51 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 Vatunty V ocel s \ (CMMI, BPMM) / Fi ft. 2 The quality e onlrol tradition Michal Krčál (KPH ESF MU) 11/51 IT Tradition - IT and business thing 50 P. Harmon 1930S 1990 S 3usiness Process Reengineering 2ÜÜQS > IT Architectures (Zachman) Enterprise Architectures (FEAF;^ -j: 'Lie: l red £; ft ware M el 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 in form alum technology Inidilion Michal Krcäl (KPH ESF MU) Economic aspects of BPM 25.4.2019 12/51 Main point How much was it about business and how much about IT? Michal Krcäl (KPH ESF MU) Economic aspects of BPM 25.4.2019 13/51 How much was it about business and how much about IT? Business rulez! 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 25.4.2019 15/51 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 25.4.2019 15/51 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 a competitive advantage in/from this? Michal Krcal (KPH ESF MU) Economic aspects of BPM 25.4.2019 15/51 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 a sense? Functional Organizational Structure General Manager Finance Human ResoLirc es Research & Development Opera Michal Krcäl (KPH ESF MU) Economic aspects of BPM 25.4.2019 17/51 • Does this structure make a sense? Yes, but... Michal Krcal (KPH ESF MU) Economic aspects of BPM 25.4.2019 17/51 • Does this structure make a sense? Yes, but... • No interconnections between departments • No customer focus, no added value focus, Michal Krcal (KPH ESF MU) Economic aspects of BPM 25.4.2019 17/51 Does this structure make a sense? Yes, but... No interconnections between departments No customer focus, no added value focus, Typical approach: overemphasis on cutting expenses and local increase of productivity Michal Krcäl (KPH ESF MU) Economic aspects of BPM 25.4.2019 17/51 Process view on the company Is this a solution? Division Product X Division Product Y Division Product Z — R&D — R&D — Marketing Finance — R&D — Marketing Finance — Marketing 1— Finance Michal Krcäl (KPH ESF MU) Economic aspects of BPM 25.4.2019 18/51 Process view on the company Is this a solution? Division Product X Division Product Y Division Product Z — R&D — R&D — Marketing Finance — R&D — Marketing Finance — Marketing 1— Finance • double activities Michal Krcäl (KPH ESF MU) Economic aspects of BPM 25.4.2019 18/51 Process view on the company Is this a solution? Division Product X — R&D — Marketing Finance Division Product Y — R&D — Marketing Finance Division Product Z — R&D — Marketing 1— Finance • double activities • fighting between process (product) departments Michal Krcäl (KPH ESF MU) Economic aspects of BPM 25.4.2019 18/51 Solution is in balance Matrix structure No extreme is usually good. Michal Krcäl (KPH ESF MU) Economic aspects of BPM 25.4.2019 19/51 Solution is in balance Matrix structure Fusion MtniB*d 1 1 1 i 11 --------------------■■ ..... ..... ..... —- ..... .... Rl llllllllllllll ULI III ■ IK "i i fi n T i I-, i r, ■ ■. f ■ . ■ -, 1 Ml Customer s ::■-..■■! Focuiod 1 ^^^-^ lUUiEL IX(i.dri^ft — • No extreme is usually good. • Any problems with this? Michal Krcäl (KPH ESF MU) Economic aspects of BPM 25.4.2019 19/51 Solution is in balance Matrix structure fusion HfinftgoH **[ ■■■■■■■■■■■■■■■■■■■■■■Llll Fiihn*ihiri - I. £1 Customer Focuxud • No extreme is usually good. • Any problems with this? • BPM shows the way how to make the matrix work! Michal Krcäl (KPH ESF MU) Economic aspects of BPM 25.4.2019 19/51 fable of contents N I Q Business Processes Michal Krcäl (KPH ESF MU) Economic aspects of BPM 25. 4. 2019 20/51 BPM and IT to usertask ID User Tas k ending o [Xj MyProtess.bpnnn £3 definitions xmlns="nttp://www. omg.org/spec/BPHN/2&l@&524/M0DE ■^process id- "processl " nnrne= "processl "> ^userTnsk id= "user t as k 1" nnrae="Lrser Task" activiti :assigne ^/endEvent> <£equenceFlow id- "f lowl " nnrae="to usertask" sourceRef-"sta ■ssequenceFlow id- "flaw2" nnme= "ending" sourceRef- "usertask Michal Krcäl (KPH ESF MU) Economic aspects of BPM 25.4.2019 21/51 BPM and business DILBERT — - .___-- j vscnrv I'd oufc new \ WOO TO I 22 ANYTHING-J (^AND THIS INTE&N HAD NO process for deciding u>hetker to wtbwcvj I A.b-iNQVlNG /"TlL IK FAVOR Gr GETTING MO OF mm am fONLY KiOWS HO la TO 00 THINGS BETTER j 1 fTOR EXAMPLE, THIS j MEETING 15 POORLY FA AN AGED btOAnj&E I VOO *A^E NO PROCESS -iOV LASTED LONGER! THAN TlfA^V THE J "FACILITATOR." -'-M--- Michal Krcal (KPH ESF MU) BPM and business processes • order-to-cash; quote-to-order; procure-to-pay; issue-to-resolution; application-to-approval < o 3 if) tfi 4) < E Adminisl ratrve. Legal, accounlmg J inand ai manageme nl finance infrastructure 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 management, 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 Source Michal Krcäl (KPH ESF MU) Economic aspects of BPM 25. 4. 2019 23/51 Michal Krcal (KPH ESF MU) Economic aspects of BPM 25.4.2019 24/51 • Business people usually don't care about technology • IT people usually don't care about business value of technology Michal Krcal (KPH ESF MU) Economic aspects of BPM 25.4.2019 24/51 • 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) <□► < rSi1 ► < -E ► < -E ► E -0 0,0 Economic aspects of BPM 25.4.2019 24/51 • 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 25.4.2019 24/51 fable of contents N I Q Break Michal Krcäl (KPH ESF MU) Economic aspects of BPM 25. 4. 2019 25/51 Q&A and discussion 15 minutes for coffee or discussion, your choice © Michal Krcal (KPH ESF MU) Economic aspects of BPM 25.4.2019 26/51 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 25. 4. 2019 27/51 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), fable of contents N I Q BPM is more than IT • BPM Life-cycle ■■ y Michal Krcäl (KPH ESF MU) Economic aspects of BPM 25. 4. 2019 29/51 Weske's Business Process Lifecycle 1 Introduction Evaluation: Process Mining Business Activity Monrtof ing Enactment: Operation Monitoring Mainlerkanoe Enactment Evaluation Administration and Stakeholders Design & Analysis ] Configuration ^ Design: Rutins** Prr:r.F=.* Identification and Model irxj Analysis: Validation Simulation Verifies lion Configuration: System Selection Implementation Test and Deployed-1 Fi^. 1-5. Business process lifecycle Michal Krcäl (KPH ESF MU) Economic aspects of BPM 25.4.2019 30/51 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 25. 4. 2019 32/51 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 25. 4. 2019 32/51 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 25.4.2019 32/51 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 25.4.2019 32/51 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 25.4.2019 32/51 Implement/Execute Your thing! Michal Krcal (KPH ESF MU) Economic aspects of BPM 25.4.2019 33/51 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 Krcal (KPH ESF MU) Economic aspects of BPM 25.4.2019 34/51 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 Krcal (KPH ESF MU) Economic aspects of BPM 25.4.2019 34/51 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 Krcal (KPH ESF MU) Economic aspects of BPM 25.4.2019 34/51 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) <□► < rS1 ► < ► -E -0 0,0 Economic aspects of BPM 25.4.2019 35/51 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 25.4.2019 35/51 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 25.4.2019 35/51 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 25.4.2019 35/51 fable of contents N I Q BPM is more than IT ^ Dr iTe~CyCie • Six Core Elements Michal Krcäl (KPH ESF MU) Economic aspects of BPM 25. 4. 2019 36/51 The Six Core Elements of Business Process Management Michal Krcäl (KPH ESF MU) Economic aspects of BPM 25. 4. 2019 37/51 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). Michal Krcal (KPH ESF MU) Economic aspects of BPM 25. 4. 2019 37/51 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 25. 4. 2019 38/51 The Six Core Elements of Business Process Management - in detail Michal Krcäl (KPH ESF MU) Economic aspects of BPM The Six Core Elements of Business Process Management - in detail O Strategic Alignment 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. Michal Krčál (KPH ESF MU) Economic aspects of BPM 25. 4. 2019 39 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. < rS1 ► < -E ► < = >■ -s O^O 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 25.4.2019 39/51 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. 4U><^>-4 = >4Sk S -O <\ O 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 25.4.2019 39/51 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) Economic aspects of BPM 25.4.2019 39/51 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) <□► < [SP ► < ► -E -0 0,0 Economic aspects of BPM 25.4.2019 39/51 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. 4U><^>-4 = >4S> s -0 0,0 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 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). < □ ► < [SP ► < ► -E -0 0,0 Michal Krcäl (KPH ESF MU) Economic aspects of BPM 25. 4. 2019 39/51 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 25. 4. 2019 39/51 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? Michal Krčál (KPH ESF MU) Economic aspects of BPM 25. 4. 2019 41 /51 What Business Activity Monitoring is for? Michal Krčál (KPH ESF MU) Economic aspects of BPM 25. 4. 2019 41 /51 What Business Activity Monitoring is for? What Business Activity Monitoring is • Any ideas? • 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 25. 4. 2019 41 /51 fable of contents O Beyond BAM • Corporate Performance Management ■■ y Michal Krcäl (KPH ESF MU) Economic aspects of BPM 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 25.4.2019 43/51 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 25. 4. 2019 44/51 Table of contents N I O Beyond BAM Business Proces Optimization Michal Krčál (KPH ESF MU) Economic aspects of BPM 25. 4. 2019 45/51 Lean Six Sigma • DMAIC = define, measure, analyze, improve, control Michal Krcal (KPH ESF MU) Economic aspects of BPM 25.4.2019 46/51 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 Urn it (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) <□► < rS1 ► < ± > < -ž ► -š -O <\ O Economic aspects of BPM 25.4.2019 46/51 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. OVGrDrOClUCtiOn 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 25. 4. 2019 47/51 Theory of Constraints TOC in nutshell Michal Krcal (KPH ESF MU) Economic aspects of BPM 25.4.2019 48/51 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 25.4.2019 48/51 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 25.4.2019 48/51 fable of contents N I Q Summary Michal Krcäl (KPH ESF MU) Economic aspects of BPM 25. 4. 2019 49/51 Summary • What to take from today ► BPM is not only IT, although it exists because of IT Michal Krcal (KPH ESF MU) Economic aspects of BPM 25.4.2019 50/51 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 25.4.2019 50/51 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 Liechtenstein) Michal Krcal (KPH ESF MU) Economic aspects of BPM 25.4.2019 50/51 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 Liechtenstein) • More about business process analysis MPHBUPM Business Process Management (autumn semester). Michal Krcal (KPH ESF MU) Economic aspects of BPM 25.4.2019 50/51 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 Liechtenstein) More about business process analysis MPHBUPM Business Process Management (autumn semester). ► You will be welcome ;-) Michal Krcal (KPH ESF MU) Economic aspects of BPM 25.4.2019 50/51 Q&A Michal Krcäl (KPH ESF MU) Economic aspects of BPM 25.4.2019 51/51