Session 2: Business Process Management Six Sigma (BPSM & SS) - Focus BPM Governance

1. Session 2: Business Process Management Six Sigma (BPSM & SS) - Focus BPM Governance Ann Rosenberg 2nd February 2012

2. AgendaBusiness Process Management Six Sigma (BPSM & SS) - Session 2: Focus BPM Governance • Company Presentation: SAP (12:00 – 12:45) • Introduction to the overall topic • Assignment 1 • Assignment 2 • BPM Governance (13:00 – 13:50) • Small Recap • Major Issues in Business Process Management: An Expert Perspective • BPM Governance (the Framework) • Classification Frameworks, RACI, PPIS, Modeling Tools • Exercise (14:00 – 14:30) • Present result of Exercise (14:30 – 15:00) • Next time: Session 3: Soft. System Method and Company presentation

3. Overview of all sessions

4. Small Recap

5. Business Process Mangement (Conceptual) Big Picture

6. A Six-Stage System Source: Integrating Strategy Planning and Operational Execution: A Six-Stage System by Rover S. Kaplan and David P. Norton

7. Linking the Strategy Model to the Operation Model Source: Linking Strategy to Operations: Process Models and Innovation by David P. Norton and Randall H. Russell

8. Stage 4: Plan Operations • Plan operations using tools such as quality and process management, reengineering, process dashboards, rolling forecasts, activity-based costing, resource capacity planning, and dynamic budgeting. • Questions: • Which business process improvements are most critical for executing the strategy? • How do we link strategy with operating plans and budgets? • Sales forcast, Resource capacity plan Dynamic operating and capital budgets

9. Major Issues in Business Process Management: An Expert Perspective

10. Major Issues in Business Process Management: An Expert Perspective RESEARCH FINDINGS Source: Bandara, Wasana and Indulska “Major issues in Business Process Management”: An expert perspective” Publication date: 2007, In Proceedings ECIS 2007 - The 15th European Conference on Information Systems, pages pp. 1240-1251, St Gallen, Switzerland.

11. BPM Governance (the Framework)

12. BPM Governance

13. Process-Based Application Continuous Process Improvement Redesign for a Process-Based SOA Business Transformation • Business buyer (supported by IT) • Rapid time to solution for new application • Extension to existing applications • Goal is broader, and better coordination of mission-critical process • Budget Trend: typically single project • Business and IT as buyer • BPM is a program, consisting of multiple projects • Goal is business agility for key processes • Budget Trend: Level or increasing investment • IT and business buyer • Improve visibility and change management • Goal is application rationalization and modernization • Budget Trend: Level funding, increasing investment if combined with CPI or shared services • Senior business executive as buyer • Rethink entire business process • Goal is make a "game-changing" play • Iterative versus “big bang” approach to achieving transformation • Budget Trend: Level or increasing budget WHAT DRIVES THE CHANGED – 4 BPM USE CASES Select the use case which support your Business Model Source: Gartner Q4 2008 – Market Trends

14. Having understood the strategy, severalbuilding blocks need to be analyzed Once the link between business process management and the corporate strategy is understood, the company needs to analyze its current process management maturity and determine what factors, or building blocks, need to be introduced or improved in the BPM implementation People Processes Structures Technology Personnel Development Strategy Business Process Operations Organization Guidelines & Standards IT Operations BPM Enablement BPM Methods Skill Profiles Process oriented Strat. Planning Process Maturity Plan Organizational Structure System Architecture Management BPM Tool Landscape Training Project Portfolio Management Process Projects Decision Making Bodies Process Terminology IT Service Execution Process-based Rewards Service Management Buiness Process Execution Roles and Tasks Tool Conventions IT Support Process Map Communication Process Performance Measurement Organizational Interaction Change Mgt. Corporate Process Reporting Budget and Cost Allocation Auditing Source: BPM Governance (Adapted from the book: Business Process Management – The SAP Roadmap, 2009)

15. The implementation approach depends onthe organizational maturity and culture In addition to defining the appropriate building blocks required for implementing BPM, an appropriate path for the Transition should be developed. The strategy as a whole should cover all of the steps in the BPM Roadmap: the Set-up, the Transition, and Continuous Improvement Source: BPM Governance (Adapted from the book: Business Process Management – The SAP Roadmap, 2009)

16. BPM Governance Set-up PhaseClassification Frameworks, RACI, PPIS, Modeling Tools

17. BPM Governance Source: BPM Governance (Adapted from the book: Business Process Management – The SAP Roadmap, 2009)

18. APQC – Process Classification Framework • PCF: • Process Classification Framework developed by APQC (American Productivity & Quality Center) • Source: http://www.apqc.org/portal/apqc/site

19. APQC – Process Measures As the world’s No. 1 most used management tool*, benchmarking is a must for organizations that want to survive—and thrive—in an increasingly competitive marketplace. Knowing where you stand is the first step in getting better. Source: http://www.apqc.org/benchmarking

20. Raci framework

21. 4 3 2 1 BPM Methodology at a Glance Process Scanning As-Is Analysis To-Be Design Solution Transformation 1.1 Understand high-level business vision and strategy 1.2 Identify business success factors 1.3 Calibrate IT topics 1.4 Define high-level process landscape 1.5 Prioritize processes 2.1 Assess reference content 2.2 Identify relevant process parameters and classification 2.3 Document as-is processes and process flow 2.4 Analyze processes and identify weaknesses 2.5 Identify interdependencies and cluster weaknesses 2.6 Assess and prioritize weakness clusters 2.7 Analyze as-is IT architecture 2.8 Consolidate roles, systems, information carrier etc. 3.1 Design to-be IT architecture 3.2 Develop weakness cause elimination approach for all relevant weakness clusters 3.3 Create to-be process definition and map solutions 3.4 Detail process description on activity level 3.5 Consolidate roles, systems, information carrier etc. 3.6 Derive necessary adoptions of the organizational structure 3.7 Develop business case • Activities for all Solution Tracks • 4.1 Elaborate solution approach per business process • 4.2 Develop transformation roadmap • 4.3 Transform IT architecture • 4.4 Identify requirements for master data concept • Solution Tracks • Core Configuration • Core enhancement • SOA/Composition • Third Party Solution • Clearly defined and agreed project goal • List of prioritized processes to be analyzed in detail • Identify relevant architecture topics • Prioritized and clustered list of weaknesses regarding process, organizational or IT technical aspects • Detailed to-be design for weakness elimination regarding all aspects evaluated during as-is • IT capabilities • BPM Blueprint that provides details of identified solution tracks and their relevant contents

22. Typical weaknesses in processes can be structured by three criteria Typical process weaknesses Process flow Organizational structure System support/data structures • Loops • Decentralized activities • Inputs not necessary, waiting times • Long lead times • Not enough information for process owners • Goal of the process not specified • High number of interfaces • Low quality of process output • No quality control for process results • No process standardization where possible • Big product and service portfolio which leads to complex processes • No outsourcing of processes which are not core to the customers business • Not enough process automation • … • Pure functional organizational structure (no process ownership across departments) • Responsibilities not clearly assigned • Overlapping responsibilities • Decision processes take too long • No fit of competencies andresponsibilities (governance) • Wrong degree of centralization and decentralization • Not enough transparency • … • Systems do not support the processes (degree of automation) • Missing functionalities • Redundant systems support • User interface not user friendly • Low data quality, redundant data • No integration • Slow information access for process owners • System support not standardized • …

23. Business Process Description – As-Is Documentation Businessobjects Process steps Business rules Involved Business Units R: Responsible; person who carries out the activity A: Accountable; person who is in charge C: Consulted; person asked before carrying out the activity or supporting the activity I: Informed; person has to be informed

24. Identified Process Weaknesses have to be Clustered • Cluster all weak-nesses due to interdependencies and similarities • Develop one solution concept for each different weakness cluster Same cause for identified weaknesses Similarities Business Processes analyzed Same cause for identified weaknesses Similarities Business Processes analyzed

25. Definition of Key Performance Indicators (KPI) and Process Performance Indicators (PPI) • KEY PERFORMANCE INDICATORS • KPIs represent business goalsthat a company wants to achieve on a rather strategiclevel. They are qualitative or quantitativeassessments of a companies performance regarding the company goals and can either befinancial or non- financial. • They are used bybusiness ownersto track the strategic performance againstbusiness goals Examples Revenue Growth Employee Turnover # of New Employees License Revenue per product in € • PROCESS PERFORMANCE INDICATORS • PPIs represent process goalsthat a company wants to achieve on arather operational level. They quantify the performance of a process along the dimension time, cost, or quality. They can be measured directly by data that is generated within a specific process flow. • They are used by process owners in business process management for process controlling and continuous optimization. Examples Cost: Engagement costs per applicant Time: average cycle time to fill a position Quality: Miss hire ration Source: BPM Governance (Adapted from the book: Business Process Management – The SAP Roadmap, 2009)

26. BPM technology (business to model and modeling to execution)

27. Modeling Activities in Process Management

28. Synchronize Design With Execution via Business Process Management Suites The Model (as Metadata) Is Used to Orchestrate the Process BPMSs create and dynamically execute explicit process models. Source: From Gartner, Janelle Hill – BPM Summit, London 2008

29. DEMO

30. Group Exercise

31. Exercise For den udleveret virksomhedscase defineres processen ved anvendelse af et RACI framework inklusive process parameterne. Der vil være mulighed for at modelere processen i i ARIS Express http://www.ariscommunity.com/aris-express 30 min

32. Exercise

33. Session 3 Soft. System Method and Company presentation(Lene Pries-Heje)Reading: Artikel 10 and 12