Business transformation with_bpm_Manila_Apr-2013

© 2013 IBM Corporation
IBM Business Process Management
Create more Value
Transform your Business Processes NOW!
Logan Vadivelu
Distinguished Chief Architect IBM Growth Market Technical Leader – BPM
SAP SME
logan.vadivelu@in.ibm.com

Agenda
A. Role of Process Innovation within organizations
B. Collaboration between Business and IT
C. Best practices for operationalizing process innovation and measuring ROI

4 © 2013 IBM Corporation
BPM Drivers
New
Intelligence
New
Intelligence
How can we take
advantage of the
wealth of
information
available in real
time from a
multitude of
sources to make
more intelligent
choices?
Customers expect
us to know them
I Need InsightI Need Insight
Smart
Work
Smart
Work
How can we work
smarter,
supported by
flexible and
maintainable
processes
modeled for the
new ways people
buy, live & work?
Business demands
more efficiency
I Need to
Optimize
I Need to
Optimize
Dynamic
Infrastructure
Dynamic
Infrastructure
How do we create
an infrastructure
that drives down
cost, is intelligent
and secure, and is
as dynamic as
today’s business
climate ?
Core systems cannot
adapt to changes
I Need to
Respond Quickly
I Need to
Respond Quickly
Risk
Management
Risk
Management
Standardization and
regulation is coming
I Need to
comply
I Need to
comply
How can we
establish risk
management
controls that will
ensure compliance
in an ever-changing
and developing
environment?

Process improvement is of utmost importance
McKinsey 2011 Technology Survey of 927 IT and non-IT Executives, December 2011
https://www.mckinseyquarterly.com/High_Tech/Strategy_Analysis/A_rising_role_for_IT_McKinsey_Global_Survey_results_2900

Flexible integration
interconnects applications and
services across the organization
Business rules and analytics
provide flexibility for repeatable
decisions that change frequently
Processes can mix structured
and unstructured activities,
according to business needs
Building Blocks to Achieve Process Innovation
Empowering business and IT users to easily manage change

Business Model Innovation
(dynamic ecosystems)
Industrialisation
Business Performance Optimisation
Innovation
•Go to market
•Customer centricity
•Personalisation
•Product provision
Process Factory
•Economies of scale
•Asset reuse
•Configure not build
•Cloud delivery
COE*
Governance
Frameworks and Industry
Standards
Component Business Models
Governance
Automation
•Visibility / analytics
•Lean six sigma
•Fraud, compliance
•Efficiency, STP
* COE = Centre of
Excellent
Governance
Fitted into an overall Business Performance Optimisation
Framework

Business Model Innovation Focus
Level 2-Industrialise
and automate the
workflow
Level 3- The business
has end-to-end process
control with full visibility
Level 5 - Ability to
rapidly innovate the
business model
Level 4 - Componentise the end-
to-end process to allow for
reuse, standardisation
innovation & operating model
consolidation
Level 1- Early
digitisation of work
allows workflow
AGILITY
BPM ADOPTION
Industrialise
Focus %
Business
Model
Innovation
Focus %
Most clients are at L1/L2 pushing
for L3 - end-to-end process
integration
Leading and innovative
organisations e.g. in
Telecoms and media
Infrastructure utilities,
transport
Central government
have the vision and
imperative to push for
L4/L5
Note – this is intended to align to the BP(S)O maturity
model
% Focus
split
High % focus
on Industrialisation
High % focus on business
model innovation

Go-to-Market
Dynamic pricing
Leverage customer insights
for target marketing
Order to Cash
Account opening process
automation
Automated order processing
& fulfillment
Product
Development
Reduce time to market of
new products & services
Streamline production
procurement sourcing
Start at the Point of Greatest Need
Typical entry points to achieve process innovation
Insurance
 Automated claims processing
 Improved fraud detection
Banking
 Reduced loan processing times
 Risk & regulatory compliance
Retail
 Retail distribution supply chain
automation
 Customer loyalty programs
Manufacturing
 Manufacturing production quality and
control
 Reduced manufacturing production time
Energy & Utilities
 Power grid management
 Energy consumption
Travel & Transportation
 Online ticketing and reservations
 Travel and hotel pricing management
Healthcare
 Improved patient care
 Fitness & nutrition
Government
 Customs & border control
 Public safety
9

Business Process Management is a Team Sport!
Business
Users
Business
Leader
IT Leader
Process
Owner
Business
Analyst
IT
Architect
“How can I work
smarter supported by
flexible and dynamic
processes modeled
for the new way
people buy, live &
work?”
understand and define business objectives
within the boundaries of the organization
constraints
link strategic intents to actionable
entities and computable measures
collaborate on the operational
aspects of the business to ensure
the right actions are being taken
show how Process Engineering efforts
are guided by the business strategy
and show a clear path from strategy to
results
Focus project efforts on the areas
and processes that bring the most
value to the business

Team Roles

Successful Adoption of BPM Is A Journey for Business & IT
Culture, Architectural Alignment, & Market Pressures Impact Adoption
Highly responsive,
agile architecture
Faster ROI
Evolution of the Agile EnterpriseEvolution of the Agile Enterprise
Level 1 Level 2 Level 3 Level 4
Gap narrows
Business
Organizational silos with
rigid boundaries. Few
processes documented,
measured. Inconsistent
improvement methodology.
Organizational silos with
rigid boundaries. Few
processes documented,
measured. Inconsistent
improvement methodology.
IT
IT is reactive. The majority
of the IT budget is spent
on maintaining the status
quo. Integration is P2P.
Minimal reuse, increasing
backlogs.
IT is reactive. The majority
of the IT budget is spent
on maintaining the status
quo. Integration is P2P.
Minimal reuse, increasing
backlogs.
Some processes
documented. Basic
measures in place for
critical processes. SME-led
improvement teams.
Some processes
documented. Basic
measures in place for
critical processes. SME-led
improvement teams.
Applications customized to
support process change.
Project/department-level IT
Services developed. Reuse
is copy-paste-modify.
Applications customized to
support process change.
Project/department-level IT
Services developed. Reuse
is copy-paste-modify.
Processes are modeled,
simulated. KPIs and real-
time dashboards provide
visibility and guide
disciplined improvement.
Processes are modeled,
simulated. KPIs and real-
time dashboards provide
visibility and guide
disciplined improvement.
Cross business unit
BPM/SOA adoption and
reuse grows. Business
policies are used to
manage process variation.
Cross business unit
BPM/SOA adoption and
reuse grows. Business
policies are used to
manage process variation.
Enterprise-level BPM/SOA
adoption with much higher
levels of reuse. Services are
assembled dynamically. IT
enables business change.
Enterprise-level BPM/SOA
adoption with much higher
levels of reuse. Services are
assembled dynamically. IT
enables business change.
Business and IT
architectures are linked
Systematic improvement using
predictive measures. Business
Analysts reuse Services.
Process change becomes a
key differentiator.
Systematic improvement using
predictive measures. Business
Analysts reuse Services.
Process change becomes a
key differentiator.

A Business and IT Approach that let's you meet tactical
strategic priorities

 Processes inside applications
• Processes are rigid and costly to change
• IT changes needed lag far behind
• With passage of time, changes may no longer be relevant
 Processes that span applications
• Any changes have implications across all applications
• Inefficient and ineffective processes remain long after the need
for change has been recognized
 Managed manual processes
• No automation exists to enable on-the-fly process changes
• No automation exists to trigger processes based on events or
patterns
 Ad-hoc processes
• Most systems are not equipped to capture ad-hoc work
• Most ad-hoc processes often not tracked or monitored
• Costs remain hidden and ad-hoc processes remain ad-hoc
Opportunities for business optimization and business innovation are lost
Challenges of Traditional Process Management

BPM Shifts Development Towards a Business Driven
Approach
Strategy
Mapping
Process
Mapping
Process
Analysis
Process
Development
Process
Monitoring
Process
Optimization
Platform
Install & Config
Environment
Configuration
Environment
Configuration
Production
Tuning
Business Driven Process DesignBusiness Driven Process Design
Infrastructure ActivitiesInfrastructure Activities

Organizations Turn to BPM to Transform the Traditional
Development Process
Define, Measure,
Analyze
Improve Control
No Integrated
Operational Control
No Integrated
Operational Control
Implementation
Highly Variable
Implementation
Highly Variable
High Investment –
Low Leverage
High Investment –
Low Leverage
Process Improvement Disciplines
(i.e. Six Sigma)
Solution Development Lifecycle
Analysis, Plan,
Design
Code
(Buy vs. Build)
Deploy,
Maintain
No Systematic
Operational Control
No Systematic
Operational Control
Rigid knowledge
buried deep in code
Rigid knowledge
buried deep in code
Functional Focus vs.
Business View
Functional Focus vs.
Business View
 Inhibitors to Increased Effectiveness:
 No direct traceability to business
objectives
 No integrated measures of success
 Separation “gap” of business
knowledge from implementation
 Difficult to communicate and visualize
business impact of change
 Limited audience can effect change
 Not oriented towards the needs of
making people more effective: As
collaborators and as participants

Productivity Benefits grow with greater process maturity

As Planning Shifts Towards Process Improvement
Identify the Low Hanging Fruit and Start Small
Scope of
first project
Associated with a
key, meaningful
initiative
Associated with a
key, meaningful
initiative
Simulation may be used to
assist with the calculation
of payback and positioning
Reengineering project
Never "One and Done"
Use a prioritization matrix early on in your process analysis
effort
Business importance

Productivity Improvements are one of the main reasons clients
implement BPM

Page 22
Pattern Characteristics
1. Human
Automation
High emphasis on Human-to-Human interaction
Activities are well understood and the flow is structured
Requires visibility and measurement of human activities
2. STP
Optimisation of a process with a key goal to increase the
volume of throughput or work completed for that process
(STP) System intensive integration, automated process.
Transactional integrity is required by the service
3. STP +
exception
As per STP but exceptions require human tasks to resolve
them
4. “Perfect
the
instruction”
Cases that have become understood over time. Knowledge
has been captured in the technology and the process is
now suitable for STP
5. “Case”
Note: People
have
different
definitions of
case
- Unstructured or structured events (triggers) OR
- Activities require collaboration OR
- Often undetermined (but not always) OR
- Knowledge intensive OR
- Content (Paper/Image, fax, electronic document … digital
image, voice, video …) OR
- Relies on people (sometimes specific expertise) OR
- Persistence (Lifecycle of case)
Productivity benefits also depend on which BPM patterns are required
in advancing BPM maturity - with STP offering 100% automation
Conten
t
/ Data
Analytics Mandatory defined
activity at any time
Prescribed pattern
or sequence
Decision
Services
Optional defined
activity at any
time
Deterministic-Managed
FlexibleDriven
Information/Worker
Mgr
.
Clerk
Auditor
Human
centric
Content STP service CaseKey

Efficiency
Saved more than $100M with
improved efficiencies and higher
levels of customer service
Effectiveness Agility
Cut “engineering” time
of designers on car systems
by 20% in one year.
Take time and cost out
of the process
Work smarter to deliver
higher revenue and profit
Outmaneuver competitors
with rapid response to change
Speed to market gains
of over 50%
Reduced
development time
by 40%
Drives $3.6M in additional
revenue and saves $2.7M by
integrated sourcing processes
with real-time inventory visibility
Line of Business Personnel
Launch Campaigns in
Two Days Instead
of Months
Project Program Transformation
23
BPM delivers increasing business value as adoption progresses

1 to 3 Weeks1 to 3 Weeks 8 to 10 Weeks8 to 10 Weeks
2 to 3
Weeks
2 to 3
Weeks
1 to 2
Weeks
1 to 2
Weeks
TestTest Go
Live
Go
Live
•BPM Analyst (1)
•Engagement Mgr
(1)
•Infr. Specialists (1)
•BPM Analyst (1)
•BPM Developer (2)
•Engagement Manager (1)
•BPM Analyst (1)
•Technical Architect (1)
•Technical Architect (1)
•Infrastructure Specialists (1)
DevelopmentDevelopment
InfrastructureInfrastructure
• Environment Install / Config
• LDAP integration
Training/ MentoringTraining/ Mentoring
• Deployment scripts/playbook
• Production Tuning
•Model Process and
Service Flows
•Build UI shells
•Create Business
Data model
•Prototype
Integrations and DB
Design
•Mock up Reports
•Develop Process to
specification
•Implement Services
with Data Flow and DB
layer
•Incorporate
integrations
•Generate data to build
reports
•Finish remaining 30%
of UI functionality with
look and feel
•Complete metrics and
reports
•Implement exception
handling and error
proofing
• Goals, Critical Success Factors
• As-Is Process Maps
• Process Analysis
• To-Be Process Maps
• Executable BPD
• Forms and Custom Reports
• KPIs and SLAs
• Business Data Model
• Simulation
DefinitionDefinition
Quick Win Pilot – Iterative playbacks
Proven BPM project timeline & roles

Project……..to Program…....to Transformation
Start small, grow fast
Build Project-Based
Credibility
1
Establish a
Program
2
Transform Across and
Beyond the Enterprise
3
25
Use a proven methodology from a trusted partner

26
Create Value – for you and
your clients.
Transform your Business
Processes. Now.

For example, BPM Agility enables innovation in Business
Models for Gridit and the Swedish Pensions Agency (PM)
Group of Telecom network operators who decided to
collaborate rather than compete
Their idea is that there is more value in providing and
managing digital content passed over a connection than
providing the connection itself, which is becoming a
commodity
They built a business platform to bring network and
content providers together to create new content-based
offers to consumers
Catalogue
Service
consumer
Service
consumer
Service
Provider
Service
Provider
Business
Platform
(BPM)
Basic BPM and SOA Vision to support
new business models at Gridit and PM
 Public Sector Agency
 Recognizes that today’s citizen needs help in
managing their whole pension whether provided by the
state, employers or private
 Vision is to build a whole pension platform to integrate
this ecosystem to provide whole pension services, that
no one can provide today that are aligned to the
citizen’s and the state’s fast evolving needs
…. Dynamic ecosystem
IBM internal only

Page 29
Example 1: Productivity Improvements in Public Sector with
BPM and Rules
Background
 Public Sector organisation
 Handling large volumes of cases
 Cases ranging from very simple (STP and STP + Exception
Pattern) to the very complex (human centric and “case”
patterns”)
 BPM maturity from level 1 to level 3
Issues
 Unable to ramp up business volumes without increasing
business FTE
 Risk of failure of end-of-life systems
 Inflexible systems
 Manual effort causes high business processing costs
 Need higher levels of process Automation through Rules and
BPM
Productivity Benefits
 Target of productivity improvements from 43% (low) to 65%
(high) primarily for easier cases
 Three-year ROI between 17-80%

Page 30
Example 1: client starting from level 1 and looking to move to
level 3 with BPM and Rules

Page 31
Example 1: 50% Manual effort is caused by the process and 50% by
data issues, Decision Mgt. (Rules) and BPM can in aggregate
increase productivity by between 46-64%
Future phases
Rules improve
productivity by 8-
16%
Over time rules are built to
increase Automation
Automation improves
productivity by 26-
33%
over time e-form
element is achieved
Automation improves
productivity by
9-15%
over time e-form is
achieved & more
complex processes are
automated
Easy cases Complex cases
Process
related
Data
related
% of FTE
% of Manual Effort
50%*
100%
0%
0% 65% 100%
* source: Head of Dept A
Productivity improvement
Low = 43%
High = 64%
Example process related –
manual effort caused by late
validation so errors get into
system
Example data related –
manual effort caused by
complex / many data
structures or case specifics

Page 32
Example 2: Productivity Improvements in Insurance with BPM
Background
 Insurance client
 Human-centric integration pattern
 Need to grow business in an complex commercial area but underwriting process unable to scale without
significant extra manual effort
Issues
 The desire is to achieve this growth with a design headcount of UW. This desire is hampered by the high
skew of quote throughput during two peak weeks at the end of quarters. These two weeks handle
approximately 35% of the quarterly quotation throughput
 The current UW process is highly manual and therefore difficult to scale to achieve this growth within the
design headcount. BPM software can automate and optimise the UW process to enable this scaling to take
place. BPM will reduce rework and orchestrate integration across multiple back-end systems.
Productivity Benefits
 Avoid adding 11 UW by end 3-year to achieve over 100% of plan at slightly under target HC by reducing the effort
required for UW managed business by approximately 33-50% for Motor and 15–20% for non motor
 3-Yr ROI of 384% (low 246%, high 707%)
 Net Benefits of £1.5m (Range £1.3m - £1.6m)
 Breakeven in 10 -15 months

Page 33
Example 2: The Proposed Solution Moves ABC from a
Manual Rekey to a More Controlled and Efficient BPM System
email
Excel
Models
Trading
UW
Systems
Paper
Document
System A
Manual re-key
Paper
Document
System A
email
Content
Mgr?
12*Brokers 12*Brokers
Automated update
Trading
UW
systems
BPM
Single point of user accessMain Opportunity for BPM
Less Impact for BPM
Replace
Excel models
Quotation/Doc
Standard
Quotation/Doc
Outputs
Reports
As Is To
Be

Page 34
0
20
40
60
80
100
Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11 Q12
Peak FTE 2.0 3.0 3.0 4.0 5.0 6.0 6.0 7.0 8.0 9.0 9.0 10.0
Extra FTE 1.0 2.0 2.0 3.0 4.0 5.0 5.0 6.0
0
20
40
60
80
100
120
Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11 Q12
Example 2: Motor – BPM avoids the need to add an extra four
FTE in order to meet growth targets
“To Be” with
BPM
Peak FTE required <4 Peak FTE required < 8 Peak FTE required > 8
Quotes/wk
Quotes/wk
2 Peak
weeks per
Qtr = 35%
of quotes
11 Non peak
Weeks per Qtr =
65% of quotes
“As Is” Manual Processes
Extra FTE
up to design
team of 8
BPM enables growth
within
Design extra headclount
BPM platform
Enables growth
Without need to
Add more UW Headcount 4
FT
E
More than 8
FTE needed
Peak FTE 2.0 3.0 3.0 3.0 3.0 3.0 4.0 4.0 5.0 5.0 5.0 6.0
Extra FTE 1.0 1.0 1.0 2.0

3535
Continuous Process Improvement via Activity Monitoring
Process Visibility Helps Business Leaders Manage & Improve Operations
Identify trends,
forecast events,
make smart
choices
Understand up-to-
minute business
performance by
monitoring KPIs
Detect, respond
rapidly to change
Rebalance
human
workload on
the fly
Continuously
improve key
business
processes
Customize
dashboards
easily

BPM Workshops Overview4/8/2005
Discovery Workshop Itinerary
Day1Day2Day3
Business Case
Overview
Kick-off and Demo
Results
Presentation
Document Findings &
Proposed Approach
Approach Evaluation
and Selection
Design Possible
Approaches
Technology
Review
Document
Findings
Document
Findings
Business
Process/Rules
Review
Roadmap
and Planning
Prep
Context & Approach
Review
Follow-up
Discussion
Documentation
Review
Tailor Workshop
Agenda
Business
Process/Rules
Review
Business
Process/Rules
Review
Business
Process/Rules
Review
Business
Process/Rules
Review
Parallel
Discovery Tracks
Parallel
Discovery Tracks
Parallel
Discovery Tracks
Playback0Playback0
Playback1Playback1
Buildfrom
scratch
Buildfrom
scratch
36

MaturityChallengesTechnologyExpertise
Succeed with an
Initial Project
Establish a
Program
Transform across
the enterprise
Identify Business
Challenge & Value
On-Demand Consulting Assistance
Turnkey
Services
Solution
Mentoring
Training
Simplicity to engage
business users
Power to scale
as business requires
Realize fast value, foster BPM adoption and create transformational impact
Visibility
Rapid time
to value
Governance
 Understand and document
existing processes
 Identify key improvement
opportunities
 Target high return
projects
 Leverage proven
methodologies to
ensure success
 Increase skills
 Establish CoE
 Optimize
established projects
 Extend to new projects
TransformationProgramProject
 Infuse a culture of
process across the
organization
37
Ensure success with a proven approach for adopting BPM

Business transformation with_bpm_Manila_Apr-2013

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