Is 684 -_f11_-_review_for_exam

IS 684 – Business Process Innovation
Review for Exam

IS 684 - Fall 2011 - Review for Exam 1

What do we mean by “work” in an
organization and how is it
accomplished?


• Work – The application of human and physical
resources such as people, equipment, time,
effort, and money to generate outputs used
by internal or external customers.


Business Processes
• A business process is a related group of steps or
activities that use people, information, and other
resources to create value for internal or external
customers. Business Processes consist of steps related
in time and place, have a beginning and end, and have
inputs and outputs.
• “A business process or business method is a collection
of related, structured activities or tasks that produce a
specific service or product (serve a particular goal) for
a particular customer or customers. It often can be
visualized with a flowchart (or other diagram) as a
sequence of activities.”
– Source: Wikipedia – September 11, 2011


Models or Frameworks for How
“work” is done in an organization
1. Alter’s Work System Framework
2. The Enterprise Business Model
3. Harmon’s Organization Diagram


Alter’s Work System Framework


• A work system is a system in which human
participants and/ or machines perform business
processes that uses (which may use) information,
technology, common infrastructure, and other
resources to produce products and/or services
for internal or external customers.
• The “work” takes place in a specific environment
(organizational, cultural, competitive, technical,
regulatory)and is guided by the strategies
(rationale and high-level choices ) of the
organization.


The Work System

The “Work”


Alter’s Work System
• Alter’s Work System Framework is not a formal
or widely adopted business concept.
• It is, however, a useful framework for
understanding how “work” gets done in an
organization.
• It draws on traditional business concepts from:
– Total Quality Management (TQM)
– Business process reengineering
– Systems theory


• A work system is not an information system.
• An information system is a special case of a
work system whose work practices are
devoted to processing information (i.e.
capturing transmitting, storing, manipulating,
displaying, retrieving information)


Work Systems in the Larger Context


The Enterprise Business Model


• The story of any enterprise begins with its business drivers, originating
from one or more influences on the marketplace: STEEPLE – Social,
Technical, Economical, Environmental, Political, Legal, and Ethical factors.
• The enterprise responds to its drivers with two main functions: Planning
and Operations.
• Planning consists of the Mission, Vision, and Strategies of the business.
• Operations are a collaboration of processes, people, and technology
supported by an underlying infrastructure which take materials, data and
other resources from Suppliers to produce products and/or services for
Customers.
• Planning remains stable over time while Operations is dynamic and
changes in response to business drivers.


Harmon’s Organization Diagram
(Modified after Rummler-Brache)


(Modified after Rummler- Brache)

• Organization diagrams are an extension of the
basic system diagram, emphasizing
relationship to the external environment.


(Modified after Rummler- Brache)

• Organization diagrams are an extension of the
basic system diagram, emphasizing
relationship to the external environment.

Inputs Outputs
Business System

Feedback

BPC 1.1 – A Business Entity as System


(Emphasizing External Relationships)
General Environmental Influences
:
Local and global economiesgovernment regulations
, ,
and social trends

information &
Labor people dividends
Shareholders
Markets

service requests
& complaints
Captial capital
Markets marketing Markets
contacts
Your Organization sales Customers
Customers
contacts
Research technology
Community
orders

products &
Vendors services
materials
delivered

competitive products
Competition

BPC 3.5

(Organization are a collection of Value Chains)

• Organizations are designed to create value for
customers.
• An organization is a collection of “value chains”.
• The value chains cross functional areas and
support a “process view” of the organization.
• The goal of an organization diagram is to have an
overview of the whole organization and think
about customers, value chains and major
stakeholders.

(Organization showing two Value Chains)
:
, ,
and social trends

Your Organization and Value Chains information &
Managment Shareholders
Markets

service requests
Engineering Production Finance Marketing Sales & complaints
Captial capital
contacts
Value Chain
sales Customers
Customers
contacts
Research technology
Community
Value Chain
orders

products &
Vendors services
materials
delivered

Competition

BPC 3.7 IS 684 - Fall 2011 - Review for Exam 21

(Showing a specific value chain with three core processes)
:
, ,
and social trends

Organization X : Widget Value Chain information &
Shareholders
Markets
Create New requests for new products
Products
Captial capital
contacts
Market & Sell sales contacts Customers
Customers
Products orders
Research technology
Community

products & services
Make & Deliver delivered
Vendors Products
materials support requests

Competition


(Showing a specific value chain with three core processes)

• In practice, we generally show the
organization diagram with a single value chain
and focus on one value-chain at a time.
• With the single value chain, we show its core
processes.
• In most cases, this “organization–level” view is
sufficient. Other techniques and tools show
the detail of sub-processes.


Value Chains


Value Chains
• The concept was first popularized by Michael
Porter.
• It is a chain of activities for a firm operating in
an industry.
• Products pass through all of the activities of
the (primary) chain, and at each step gain
value.


Michael Porter’s Generic Value Chain
Firm Infrastructure
Support Activities

Human Resource Management

Technology Development

Procurement

Margin
Primary Activities

Inbound Outbound Marketing
Operations Service
Logistics Logistics and Sales

BPC 1.2


Inter-organizational Value Chain or
Supply Chain


Michael Hammer’s
Principles for Reengineering


Hammer’s Seven Principles
Which ones apply today?
1. Organize around outcomes, not tasks
2. Users of output perform the process
3. Subsume information processing work
4. Treat geographically dispersed resources as if
they are centralized
5. Link parallel activities instead of integrating their
results
6. Put the decision point where the work is
performed, build control into process
7. Capture information once at the source

IS 684 - Week #3 30

Hammer’s Principles #1 & #2
1. Organize around outcomes, not tasks. This principle
suggests that a single person perform all the steps in a
process and that person's job be designed around the
outcome or objective rather than a single task.
2. Have those who use the output of the process
perform the process. In this way, there is little need
for the overhead associated with managing it.
Interfaces, liaisons and mechanisms used to
coordinate those who perform the process with those
who use it can be eliminated.


3. Subsume information-processing work into
the real work that produces the information.
4. Treat geographically dispersed resources as
though they were centralized. Companies
can use databases, telecommunications
networks, and standardized processing
systems to get the benefits of scale and
coordination while maintaining the benefits
of flexibility and service.


5. Link parallel activities instead of integrating their
results. This principle means to forge links between
parallel functions and to coordinate them while their
activities are in process rather than after they are
completed.
6. Put the decision point where the work is performed,
and build control into the process. This principle
suggests that instead of having those who do the
work separate from those who monitor the work, the
people who do the work should also make the
decisions and that the process itself can have built-in
controls.


Hammer’s Principles #7
7. Capture information once and at the source.
A critical factor for reengineering of the
business process to succeed is to have
executive leadership with real vision. Only if
top-level management back the effort and
outlast the cynics will people take
reengineering seriously.


Background Theory:
Problem Types


Problem Types
• Herbert Simon • Denning (Getting to ”We”)
– Programmed – Routine
– Non-Programmed – Messy
• Re-worked as – Wicked
– Structured
– Semi-structured
– Unstructured
• On a continuum


Problem Solving
• Structured:
– they are repetitive and routine.
– follow a preset definite procedure each time they
occur, so you don’t have to start new again each time
they occur.
• Unstructured:
– they are novel and consequential; no cut-and-dried
method for handling the problem exists, because it
probably hasn’t occurred before, or its precise nature
and structure are elusive or complex.
– The problem may be so important that it deserves a
custom-tailored solution.
– calls for intelligent, adaptive, problem-oriented action


Problem Solving - 2
• Routine
– can be solved with refinements of previous or
prototype solutions
• Messy
– are large, complex, seemingly intractable situations;
they can only be solved with creativity
• Wicked
– are beyond messy in that people cannot agree on
what the problem is or how to evaluate possible
solutions


Problem Solving - 3
• The more structured a problem, the more
likely is the easy of automation.
• As structure decreases, additional information
is helpful as well as structured problem
solving discussion techniques (e.g. Delphi,
Brainstorming)
• With very complex and unstructured
problems, domain expertise is essential.


The Process/Knowledge Continuum

Simple Very
More Complex
Procedural Complex
Processes
Processes Processes
Ordinary Workers Knoweldge Workers Experts

A Step-By-Step Sequence A Branching Sequence Sequence Defined by Process
Few Rules or Decision Points Many Rules or Decision Points Heuristics and Guesses
Well Defined Subject Matter A Less Well Defined Subject Evolving Subject Matter
Matter

Manufacturing Line Repair of Equipment New Product Development
Retail Sales Field Sales Software System Design
Bookeeping Process Analysis Consulting

Can Be Automated

BPC 10.1


Link to the Gorry and Scott
Morton Framework


Background Theory:
Coordination and Collaboration
As we deal with “messy” and
“wicked” problem types


Problem Solving - 4
• As problems become more “messy” and “wicked”,
collaboration is essential for solving them.
• Collaboration generally means “working together
“synergistically” – if your work requires support and
agreement of others before you take action, you are
collaborating.
• Remember Hammer Principle #5:
– Link parallel activities instead of integrating their
results
• We can use the concepts to understand process
interoperability.


Denning’s Article on Collaboration
• Denning: “People Fail into Collaboration”
• Alternatives:
– Authoritarianism
– Competition
– Collaboration
• Disincentives for Collaboration:
– “Standing Our Ground”
– “Hero Celebration”

IS 684 - Fall 2011 - Week #4 45

Four Levels of “Working Together”
or Joint Action
(Also called
With examples of groupware tools
Communication)
First level re-labeled as “Communication”, then
We speak of the “4C’s of Collaboration

From:
Denning, “Getting to the We”, CACM, Apr. 2008.

Communication, Coordination, and
Cooperation are all weaker forms of
Collaboration.

IS 684 - Fall 2011 - Week #4 46

Coordination


Language Action Philosophy (LAP)
(not Language Action Perspective)

• Denning’s article “Accomplishment”
– Deals with inner workings of “commitment” and
“coordination”
– Without commitment, most coordination fails
– Without coordination, most goals are not achieved.
– Participants are distinct observers whose interpretations of
events may not agree.
– Mismatched interpretations of promises result in broken
coordination and distrust (have you ever assumed
someone else interprets something the same way you
have?)
– LAP reveals practical ways to improve coordination and
effective action.

IS 684 - Week #5 48

Coordination: Action Loops
• The most fundamental human coordination pattern is the action
loop. This is a conversational protocol in which one person fulfills a
promise to the satisfaction of another. The backbone of the
protocol between the requestor (A) and performer (B) is:
– A: I request.
– B: I accept. (or I promise)
– B: I perform (or I state or I deliver)
– A: I am satisfied.

(sometimes promise)

(sometimes state or deliver)


Coordination: Action Loops (2)
• A’s request includes a
statement, the proposed
Condition of Satisfaction
(CoS)
• After negotiation, B
agrees to a (possibly
modified) CoS.
• After a period of
performance, B declares
CoS fulfilled.
• A reviews’ B’s work and
declares satisfaction.

IS 684 - Week #5 50

Dependencies
• The generic action loop captures the form, but
not the meaning of most two-person
interactions.
• Most “conditions of satisfaction” are arranged
around a small number of dependencies:
– Sharing dependency
– Flow dependency
– Fit dependency


Shared Dependencies
• Sharing dependencies occur whenever multiple
activities all use the same (usually limited) resource.
The future behavior of activities depends on the
resource. For example, travel agents will offer seats
only on published flights to their clients. If the resource
is limited, the future behavior may also depend on
what other activities are doing with the resource; for
example, B may be forced to wait until A releases
shared memory.

A and B are activities,
and R Is a resource


Flow Dependencies
• Flow dependencies arise whenever one activity
produces a resource that is used by another
activity. This common dependency includes
message exchange, signaling, and
flowcharting.

and R Is a resource


Fit Dependencies
• Fit dependencies arise when multiple activities
collectively produce, contribute to, or update a single
resource. This kind of dependency arises when
several engineers are designing different modules of
a software system, when an assembly line is fitting
parts into a car, or when different travel agents are
booking seats on the same flight.

and R Is a resource


The 4Cs – Levels of Joint Action
• Communication – there needs to be a
common language at a minimum so that
results can be collected together into a whole.
• Coordination – this level has solved the
Sharing dependency problem.
• Cooperation – this level has solved the Flow
dependency problem (and sharing as well).
• Collaboration – this level has solved the Fit
dependency problem ( and sharing and Flow).
IS 684 - Fall 2011 - Week #4 56

4Cs of Collaboration

(joint product development)

IS 684 - Fall 2011 - Week #4 57

Link to Alter – Integration
Characteristic

IS 684 - Fall 2011 - Week #4 58

Link to Alter – Integration
Characteristic

IS 684 - Fall 2011 - Week #4 59

Conclusions about Collaboration
• Link parallel activities instead of integrating their
results
– Communication – collection
– Coordination – sharing
– Cooperation – flow
– Collaboration – fit
• Higher levels of collaboration require higher
levels of trust
• Need a process structuring principle to assure
commitments.
IS 684 - Fall 2011 - Week #4 60

Actor Transaction Diagram

Dietz, The Deep Structure of Business
Processes

IS 684 - Week #5 61

Introduction to
Actor Transaction Diagrams
• LAP-based DEMO (Design and Engineering Methodology for
Organizations) methodology reveals the essential
structure of business processes.
• Uses terminology consistent with other
readings.

IS 684 - Week #5 62

Organizational Actors (subjects)
• Actors perform two kinds of acts:
– P-Acts: Production acts –
• Actors contribute to bringing about goods or services
that are delivered to the environment
• P-Acts are material (manufacturing, transporting goods)
or immaterial (grant insurance claims, sells goods)
– C-Acts: Coordination Acts
• Actors enter into and comply with commitments
toward each other regarding performance of P-Acts.
• Examples are “request”, “promise”, “decline”

IS 684 - Week #5 63

Workflow Loop and Basic Transaction
Pattern of DEMO

4 Phases that Result in 4 Speech Acts

IS 684 - Week #5 64

Actor Transaction Diagrams (ATD)
• Essential Map and Atomic Level – Let’s call these
the Top Level and the Detail Level ATD.
• Request (R), Promise (P), State (S), Accept (A)

IS 684 - Week #5 65

Top Level: Ford Accounts Payable

IS 684 - Week #5 66

Detail Level: Ford Accounts Payable

IS 684 - Week #5 67

DEMO Notation and Example
• Figure 3 shows the Ford Accounts Payable (AP)
“invoice-less processing”.
• There are two types of Abstractions: Essential
Map and the Atomic Level. (page 62) – Again,
Let’s call these the Top Level and the Detail Level
ATD.
• Note the dashed arrows between T2/ac and
T3/rq and T3/ac and T1.
• Try to draw the before situation. What is
different?
IS 684 - Week #5 68

Example Using Widmeyer Preferred
Notation (based on DEMO)

IS 684 - Week #5 71

Conclusions
• The action loop is the foundational element of all
coordination principles.
• Model business processes using ATD.
– Do Top Level and Detail Level diagrams.
– Use Request (R), Promise (P), State (S), Accept (A).
– Number each of the transactions.
– Use dotted lines to show precedence.
• Use ATD to find coordination breakdowns by
identifying the missing communication speech
acts.
IS 684 - Week #5 72

Performance


Process Performance Metrics
Performance Typical Performance Metric
Indicator
Activity Rate •Number of steps performed per hour
•Number of units started per day
Output Rate •Number of completions per day
•Number of shipments per week
Defect rate •Number of defects per 1,000 units
•Number of defects per day
Rework rate •Number of units reworked per week
•Percentage of labor time per week devoted to rework
Consistency •Number of deviations from standard per 1,000 units produced
•Number of significant deviations from standard per week
Cycle time •Average time from start to finish ( also called lead )
Efficiency •Units produced per labor hour or machine hour
Uptime •Percentage of time in operation or available for operation
Vulnerability •Number of security-related incidents per month
•Number of IS 684 - Fallsecurity-related weaknesses, weighted by
known 2011 - Review for Exam 74
seriousness

Evaluating Work System Performance
• Let’s suppose the business process is currently
operating at optimal levels.
• Are there other considerations for improving
the work system’s performance?
• Remember: Both the business process and the
Work System have a goal of producing a
product or service for a customer.


• How might we look at performance for the
other work system elements?
– Customer
– Product or Service
– Participants
– Information
– Technology
• How might performance for these elements
be measured?



More Performance
Metrics


Work Systems vs. Information Systems


BPTrends Methodology


BP Trends – Business Process Pyramid
• Different Levels of Concern for BPM:
– Strategy or Enterprise level
• On-going management activities to support management
decision-making and to define process change opportunities.
– Process level –
• A variety of specific projects to create, redesign, or improve
specific business processes. Normally managed by divisional
or department mangers.
– Implementation Level
• Specific initiatives or projects designed to acquire and install
new software applications or create new training courses
that will implement changes defined at process level.

IS 684 - Week #3 81

BPTrends Business Process Pyramid
Strategy
Enterprise Process Architecture
Level Performance Measurement
Process Management Alignment
BPM Governance Priorities and Planning

Business
Process Business Process
Process Resign &
Level Improvement Projects
Six Sigma & Lean Projects
Documentation Projects
Specific
Implementation Activity

Level
.
Human Resource IT Development Projects
Development Undertaken
to Develop
Job Design BPMS, BAM Resources
A Mix of IT for New
Training Application Development Processes
Development and HR ERP Installation
Knowledge Development Database Development
Management

Physical Plant and Hardware Used

BPC – i.1 IS 684 - Fall 2011 - Review for Exam 82

Process Change in Organizations is
Multidimensional
Design &
Goals & Measures Management
Implementation

Organizational Goals and
Organizational Organizational Design Organizational
Measures of Organizational
Level and Implementation Management
Success

Process Goals and
Process Process Design Process
Measures of Process
Level and Implementation Management
Success

Activity or
Activity Goals and Measures Activity Design Activity
Performance of Activity Success and Implementation Management
Level

BPC 1.4

SEI’s Capability Maturity Model
• The CMM team defined 5 stages that
organizations go through as they move from
immature to a mature understanding of
business processes.
• Originally developed for software engineering,
it is now used as a generic model to aid in
improving organizational business processes.


The CMM Process Maturity Ladder
(BPC i.5)
Organizations with an mature mastery of their processes. 5. Optimizing

Continuous process
Organizations at this level routinely expact managers and employees to work together to
improvement is enabled by
improve processes. They understand their processes well enough that they can conduct
quantitative feedback for
systematic experiments to determine if changes will be useful or not.
the process and from
piloting innovative new
Only a few organizations have an organization 4. Managed ideals and technologies.
wide understanding of how processes relate and
have their corporate strategies and goals aligned, Detailed measures of the
via the management hierarchy to specific process process and product quality
activities. are collected. Both the
process and products are
quantitatively understood
3. Defined and controlled.

Most organizations are between levers 2 and 3.
They have processes documented and The process for both
standardized but in many cases manager's goals management and
are only loosly linked to process goals. engineering is documented,
standardized and integrated
by an organization
2. Repeatable methodology

Basic project management
processes are established
As organizations become more mature they begin to
to track cost, schedule, and
conceptualize business processes and seek to
functionality. The necessary
organize them, repeat successes and measure results.
discipline is in place to
1. Initial repeat earlier successes

The process is ad hoc.
Few activities are explicitly Enterprenural organizations and new
defined and success divisions that do things any way they can to
depends on individual effort get started.
and heroics.
IS 684 - Fall 2011 - Review for an immature mastery of their processes.
Organizations with Exam 85

Characteristics of the Maturity Levels


BPTrends Process Change
Methodology


Methodology
• Two Complimentary Methodologies
– Enterprise Change (Top)
• Activities companies go through to create and use
enterprise level process tools to manage all its process
work
• Often an on-going effort of management
– Business Process Change Projects (Bottom)
• Steps that a process team goes through to redesign or
improve a specific business process.
• Similar to other process improvement methodologies
(e.g. Alter’s Work systems Method)

IS 684 - Week #6 88

Important Note About Text Book Error
• In discussing The BPTrends Enterprise
Methodology the text in figure 3.1 shows


Methodology
BPTrends Enterprise Methodology
Corporate Strategy On-Going Execution

Define Build Process Manage
Understand
Business Process Management Enterprise
Enterprise
Enterprise Architecture Capability Processes
Level
▪ Create Business Model ▪ Model Major Processes ▪ Identify Process Managers
▪ Define Value Chains ▪ Establish KPIs ▪ Define Manager’s Scorecards Define &
▪ Link to Strategy ▪ Align Resources to ▪ Create BPM Group Monitor &
Prioritize Report on
Processes Projects Process
Performance

Day-to-Day
BPTrends Business Process Redesign Methodology Process Management
Process Analyze Redesign
Implement Roll-Out
Level Understand Redesigned Redesigned Execute
Business Business
Project Business Business Process
Process Process
Process PRocess

Implementation
Level If significant IT or HR development
work is required then the Process
, Various IT &
Redesign Project assigns projects to HR Projects,
IT or HR for development . etc.
.


Methodology

Understand
Enterprise
Level
Performance

Day-to-Day
Implement Roll-Out
Business Business
Process Process
Process PRocess

Implementation
, Various IT &
.


Methodology


Enterprise Level Concerns


Enterprise Methodology


• Phase 1:Understand the Enterprise
– Understand and agree on basic value-chain
processes the company supports and the strategic
goals each value chain supports
– Use The Enterprise Business Model and
Organizational Diagrams to understand the
business and its key relationships.


• Phase 2: Define Business Process Architecture
– The organization is a collection of value chains
– Select a specific value chain and create a business
process architecture for that value chain.
– Hierarchically decompose the processes that make
up the value chain.
Architecture Analysis Worksheet – Level 1 Processes
Value Chain : Value Chain Process Manager
Strategic Goals for Value Chain :

Level 1 Processes Process Manager Level 1 Goals /Process Metrics Level 1 Resources

.

Hierarchical Decomposition of a Value Chain
Value Chain Level 0

High-Level
Business Business Process Business Process Business Process Level 1
Processes:
Focus of
Architectural Level 2
Process Process Process
Analysis

Sub-Process Sub-Process Sub-Process Level 3

Mid-Level Level 4
Sub-Sub-Process Sub-Sub-Process
Processes:
Focus of Most
Process Redesign
and Improvement Sub-Sub-Sub-Process Sub-Sub-Sub-Process Sub-Sub-Sub-Process Level 5
Projects

Sub-Sub-Sub-Sub-Process Sub-Sub-Sub-Sub-Process Level 6

Activities,
Procedures, Activity Activity Level 7
Tasks and,
Steps:
Focus of Task Procedure
Step 1
Analysis Step 2
Step 3

BPC 8.2

Level 2 Processes
Architecture Analysis Worksheet – Level 2 Processes
Value Chain : The Widget Value Chain Level 1 Process: Widget Supply Chain
Goals and Measures for Level 1 Process:
Increase customer satisfaction (Reduce complaints by 50%)
Reduce costs (By 15% per year )

Level 2 Processes Process Manager Level 2 Goals /Process Metrics Level 2 Resources

Make Process Artie Kahn Reliability ERP Modules Used
Perfect Order Fulfillment
Responsiveness
Make Cycle Time Business Rules Used
Flexibility
Upside Make Flexibility
Downside Make Adaptability Employee Training Courses Used
Upside Make Adaptability
Cost
Plant Operating Cost per Hour
Indirect to Direct Headcount Ratio
Costunit
Indirect to Direct Process Cost Ratio
Product Losses (Sources /In-Process/Finished)
Assets
Cash to Cash Cycle Time
Inventory Aging
Return on Supply Chain Fixed Assets

Deliver Process

Copyright © 2007 BPTrends . All Rights Reserved .


• Phase 2: Defining Business Process Architecture
– There are different ways of developing a
comprehensive decomposition of a value-chain.
– Traditional way is get room full of senior executives and
ask the question: “How do you …?” and document.
– Increasingly the analysis of process architectures use
process frameworks – generic models of all the
processes in a value chain (often industry specific).
– Process framework-based approaches can work
because at levels 0, 1, and 2 most companies within an
industry may do things in a similar manner.


• Phase 2: Defining Business Process Architecture
– Some Process Frameworks
• SCOR – Supply Chain Operations Reference Model is a process
reference model endorsed by the Supply Chain Council (SCC)
as the de-facto standard diagnostic standard for supply chain
management. (see BPC pp. 93-102).
• eTOM – The TeleManagement Forum’s framework highly
tailored to telecom companies. It is a reference architecture
that assumes, over time, most members will move toward
this process architecture as “best practice”.
• With standards used by many companies, third-party vendors
will develop BPM products to implement many of the
processes defined by the model.


(The three levels of a SCOR architecture)
Business
Level 0
A Value Chain
Value Chain E.g. Design Make, and Sell Widgets
: ,
Distributor
Other Supply Supply Chain Supply Chains
Chains Process or Customers
Level 1
A Supply Chain

Source Make Deliver
Plan
D1 Deliver
S1 Source M1 Make-to-Stock
Stocked Products
Stocked Products
D2 Deliver
S2 Source M2 Make-to-Order
Level 2 MTO Products
MTO Products
Processes and
S3 Source D3 Deliver
Variations M3 Engineer-to-Order
ETO Products
ETO Proudcts

Level 3 Subprocesses for a single Return
Level 2 Variation : S3

S3. Source Engineeer-to-Order Product
S3.1 S3.2 S3.3 S3.4 S3.5

Schedule Authorize
Receive Verify Transfer
Product Supplier
Product Product Product
Deliveries Payment


• Phase 3: Build Process Management Capability
– A Business Process Architecture can be a minimal
architecture that identifiers the major value chain and
key processes and the relationships between them, or
it can be a more detailed architecture that defines
processes, managers, measures, links to strategies and
policies, links to IT resources, links to training
resources, etc.
– The more elaborate the process architecture, the more
valuable it will be a senior management tool.
– If an organization is serious about building a large
architecture, it needs a “process” to maintain it and
keep it up-to-date.

• Phase 3: Build Process Management Capability
– Some organizations will create a formal BPM Group
to maintain the Business Process architecture.
Assemble process
information into a consistent Maintain up-to-date business
BP architecture Create and maintain the enterprise process architecture
business process architecture
Update architecture with (Maintain BPM repository)
Work with strategy group to
new information estimate implications of
proposed changes
Use architecture to identify problems with processes

BPC 7.2

Processes a BPM Group Might Manage
BPM Group
BPM Group Processes:
Assemble process
information into a consistent Maintain up-to-date business
BP architecture Create and maintain the enterprise process architecture
business process architecture
Update architecture with (Maintain BPM repository )
Work with strategy group to
new information estimate implications of
proposed changes
Gather information on processes Scope and prioritize possible
that need to be changed Identify, prioritize, and scope process change projects
business process change projects and
Gather information on available manage process change resources Assign teams to process
processes change resources change projects

Report on corporate process
Collect daily / monthly data performance
on process performance Help create, maintain, and manage
the process performance system Report on Enterprise BP
Gather Information on Maturity Audits
Enterprise Process Maturity
Manage managers BP
Help create and support the process scorecards & evaluations
New managers manager system BP manager job descriptions
(Create/maintain BP management training )
Train all new managers in
business process techniques
Various BP standards and
tools available Recruit, train, manage business process Manage BP change projects
change professionals
Hire, manage BP professionals (Standardize on methodologies , BP tools) Acquire BPM tools

Prepare reports for Sarbanes -
External demands for process Manage risk / compliance reporting & Oxley & ISO 9000 organizations
documentation a & meansures documentation maintenance Update Sarbanes-Oxley &
ISO 9000 documentation

Enterprise Level Process Change
Complex Very
Dynamic
Negotiation,
Design or
Decision Complex, Dynamic
Process Complex Processes Not
, Processes of High Value :
Part of Company Core
's Undertake Business

Process Complexity and Dynamics
Compentcy : Process Improvement
Many Outsource Efforts that Focus on
business People
rules.
Expertise
involved

Some
business
Straightforward,
rules Static, Commodity Straightforward ,
Processes: Static, and Valuable:
Use Automated ERP -type Automate to Gain
Applications and/or Efficiency
Oursource
Procedure
Simple
Algorithm Doesn’t
Change
Lo Strategic Importance Hi

Must Be Done, But Very Important to
Adds Little Value to Success, High Value
Products or Added to Products or
Services Services


Enterprise Level Process Change
Complex Hi
Negotiation, Outsourcing
Design or Projects Major
Decision Redesing
Process Projects

Many business
rules. Expertise
involved

Software
Automation
Some
Projects
business
rules

ERP-Based Six Sigma-Based
Process Process Improvement
Automation
Procedure
Simple Algorithm
Lo


Products or Services Added to Products or Services


Process Level Concerns


Methodology

Understand
Enterprise
Level
Performance

Day-to-Day
Implement Roll-Out
Business Business
Process Process
Process PRocess

Implementation
, Various IT &
.

BPC 3.1


Levels of Abstraction
• Figure 8.2 shows a hierarchical decomposition of
a value chain – “Architectural Analysis”
– High-level process: focus of architectural analysis
– Mid-level process: focus of most process redesign and
improvement projects – Most redesign processes
aimed here
– Activities, procedures, tasks and steps: focus of task
analysis (to be talked about later)
• Figure 8.5 shows the space of possibilities created
by crossing levels of analysis with process
complexity (recall Figure 7.6, page 171).

IS 684 - Weeks #8 and #9 - BPMN 109

Hierarchical Decomposition – BPC 8.2
Value Chain Level 0

High-Level
Business Business Process Business Process Business Process Level 1
Processes :
Focus of
Architectural Level 2
Process Process Process
Analysis

Sub-Process Sub-Process Sub-Process Level 3

Mid-Level Level 4
Sub-Sub-Process Sub-Sub-Process
Processes :
Focus of Most
Process Redesign
and Improvement Sub-Sub-Sub-Process Sub-Sub-Sub-Process Sub-Sub-Sub-Process Level 5
Projects

Sub-Sub-Sub-Sub-Process Sub-Sub-Sub-Sub-Process Level 6

Activities ,
Procedures , Activity Activity Level 7
Tasks and ,
Steps:
Focus of Task Procedure
Step 1
Analysis Step 2
Step 3


Different Level of Process Analysis – BPC 8.3
Higher-Level Process Analysis : Architectural Focus -- The Major Business Processes and
their Inputs, Outputs and Measures

Mid-Level Process Analysis : Processes that make up major business processes and their
sub-processes.

Process A

Inputs Outputs
Process B

"Supplier" "Customer"
Contract Contract

Subprocess A -3

Steps in a Specific activity
Roles that perform each step
Any software used to support a step
Rules used to make decisions

Activity Level Analysis: Detailed analysis of a specific activity , including the procedural
steps, the roles, the rules and the IT systems used.

Complexity Matters – BPC 8.4

Simple Very
More Complex
Procedural Complex
Processes
Processes Processes

A Step-By-Step Sequence A Branching Sequence Sequence Defined by Process
Few Rules or Decision Points Many Rules or Decision Points Heuristics and Guesses
Well Defined Subject Matter A Less Well Defined Subject Evolving Subject Matter
Matter

Manufacturing Line Repair of Equipment New Product Development
Retail Sales Field Sales Software System Design
Bookeeping Process Analysis Consulting

Can Be Automated


Level of Abstraction vs. Project Complexity – Fig. 8.5

The Task Complexity Continuum
Very Complex,
Very Simple, Tasks of Middle Complexity Creative and
Repetitive that Require More Flexible Unpredictable
Procedures Responses Activities

High-Level
Processes
Level of Abstraction

Mid-Level Knowledge
Processes Work

Specific
Activities &
Tasks


Process Complexity and Dynamics vs. Strategic
Importance (Helps Prioritize at Enterprise Level)
Complex Very
Dynamic
Negotiation,
Design or
Decision Complex, Dynamic
Process Complex Processes Not
, Processes of High Value :
Part of Company Core
's Undertake Business

Compentcy : Process Improvement
Many Outsource Efforts that Focus on
business People
rules.
Expertise
involved

Some
business
Straightforward,
rules Static, Commodity Straightforward ,
Processes: Static, and Valuable:
Use Automated ERP -type Automate to Gain
Applications and/or Efficiency
Oursource
Procedure
Simple
Algorithm Doesn’t
Change

Products or Added to Products or
Services Services
BPC – Fig. 7-6. IS 684 - Weeks #8 and #9 - BPMN 114

The Gap Model
Measures of Desired Measures
As-Is Process’s of To-Be Process’s
Performance Performance

Performance Gap

Existing or Redesigned
As-Is or To-Be
Process Process

Capabilities Gap
BPC 8.6
How we do How we will Need to
Things Now do things in the
Future
(Note: textbook has Fig. 8.6 and 8.7 labels swapped)

Some relationships between causes,
problems, and consequences. – Fig. 8.7
Causes Problems Consequences

Lack of Information Bad Decisions Customers Unhappy

Poor Business Rules Bad Products Losing Market Share

Unnecessary Activities Most Costly Then
No Feedback
Performed Competiton
Poorly Designed
Bad Inputs
Products

Inputs Unpredictable

Note: Textbook has Fig. 8.6 and 8.7 labels swapped


Gap Model Suggests a Need
Measures of As- Desired Measures of
Is Process’s To-Be Process’s
Product Performance Performance
Performance Gap
Production Management
Cycle Wants
Currently Process
Existing or Redesigned
Takes 5 Outputs in
As-Is or To-Be Half the Time
Hours Process Process

Capabilities Gap

What is Done What Will Need to
Now Be Done
Analysis Techniques Used to Define the Gap
A Time Study Shows that Work Often Goes to
Inventory Between Workstations and Stays
There on Average 3 Hours

Redesign Techniques Used to Modify the
Capabilities of the Process
Lean Technique:
Streamline Flow by Reorganizing Steps to Eliminate
BPC 8.8 Moving Work to Inventory


Project Scoping Diagram
• Figure 8.12 shows the elements of a Project Scoping
Diagram (PSD). (Recall Organization Diagram – Fig. 7.5)
1. Inputs
2. Process
3. Outputs
4. Controls (manage, constrain, control)
5. Enablers (support or enable the process)
• Figure 8.13 shows a Cause-Effect diagram (also called
Ishikawa or fishbone diagram).
• Figure 8.19 shows a PSD with problems indicated.
• It is often necessary to expand the scope to other
processes.

Project Scoping – BPC 8.12
Management Controls come from other processes in
Core
Process architecture or from an External
Process
Support Stakeholder or a Process Enabler
Process

Management Information that will be referenced by processes Management
Process Methods and Rules that will guide the Process
processing
Events – Triggering & Completion
Core Core
Process Process
Controls

Support
Inputs to O Support
Process Process: I u Process
Material to be n The Process Area: t
transformed p Results of
Inputs come The Process/Activities p
Information to be Processing Outputs go to
from other u Being Analyzed u
processes other
processes in t t
States to be processes in
architecture s s
changed architecture
or
People or
from an Enablers to an External
External
Stakeholder
Stakeholder
People assigned to process
Technologies used in process
Facilities that are used

Management
Core
Process
Process
Support
Enablers come from other processes in
Process IS architecture or from -an External
684 - Weeks #8 and #9 BPMN 119
Stakeholder

Recall: Organization Diagram – Fig. 7.5
General Environmental Influences :
The US and world economies , government regulations ,
Suppliers & Partners and social trends
Customers & Owners
information
Labor people An Organization / A Specific Value Chain & dividends
Shareholders
Markets

advertising
Market Product
prospect identification

Captial capital Market
Markets
Create New
Product product
Customers
delivered Customers

Research technology
Community
Make Products
analysis of
competitor’s
sales contacts
products
Sell & Service orders
Vendors Products
materials service requests
& complaints

Competition


What is the Project Scope
Diagram Really Showing You?
“How work gets done!”


Generic Process Problems
• The Project Scoping Diagram allows one to focus
on five generic types of process problems:
– Process Flow and Day-to-Day Management Problems
– Output Problems
– Input Problems
– Problems with Controls
– Problems with Enablers
• Checklists in BPC pp. 212 - 222


Process Modeling Techniques


Process Modeling Techniques
• Flow Charts
• Data Flow Diagrams
• Swim Lanes
• Business Process Modeling Notation


Additional Review Topics
• Process Characteristics: Week #2 – Start slide
61.
• Performance: Week #10 – A very important
topic, especially beginning Slide 44.
• BPMN: Review the Tutorial set of slides from
Stephen White, posted in Moodle under Week
#8. I will include with the exam the BPMN 2.0
Poster in Moodle under week #8


Is 684 -_f11_-_review_for_exam

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