Architecture + Process: BPM for Enterprise Architects

Presentation given at Architecture + Process Conference, Washington, D.C., April 23rd, 2007

1. Michael zur Muehlen, Ph.D.
Center of Excellence in Business Process Innovation
Howe School of Technology Management
Stevens Institute of Technology
Hoboken NJ
[email protected]
What every Enterprise Architect
needs to know about BPM
1

2. What is BPM?
2

3. What is BPM?
2
Let’s start with the process definition:
A Business Process is the temporal and logical sequence
of those activities that are necessary to manipulate an
economically relevant object toward an overarching goal,
creating value for a customer

4. What is BPM?
Business Process Management is comprised
of the methods and tools that allow us to answer:
How do we make our processes perform better?
How do we maintain required compliance?
And, by the way: What are our processes?
2

5. “Let’s try this out
first”
Choose a single pilot process to gain
experience with BPM
Good: High-value, low-medium risk
business case
Example: Onboarding, Claims Processing
Bad: No-value, no-risk business case
Example: Vacation request, Expense
reimbursement
3

6. Scheduled Project
Time during First
BPM Project
4
Business Case
Project Team Selection
Process Discovery
Documentation
Functional and Technical Specification
Tools Evaluation and Selection
Implementation
Testing and Debugging
Deployment and Training
Source: BPTrends (2006)

7. Problem: Process
Confabulation
Problem
People should know why they perform tasks
If they don’t, they make up explanations
Consequence
Accurate process discovery becomes difficult
Reinforces assumptions that participants share
about the process (Black Swan problem)
Solution
Observe rather than ask
Follow the process object
Rainy Day Approach: Use Specific Examples
5

8. Problem: Paper Bias
Problem
Process designs mimic paper-based processes
Consequence
Innovative designs are overlooked
Inefficiencies remain because technology
capabilities are underutilized
But: Processes are easily understood by those
who are used to paper
Solution
Model backwards
Focus on data dependencies
6

9. 7
Industrialization of Back Office
Input ChannelsOrder
Management
Process
Job Types
Production Management
Transparency
Automation, but only if not
too complex / rare
other regulatory requirements
no economies of scaleTrading Acct. Mgmt. Payments Complaints Input Cases

10. Search processes using
technical criteria
business criteria
Display shows
status
start time
end time
instance data
Drill Down is possible
8
Example: Back Office

11. 9
Example: Back Office

12. 10
“Let’s model
everything”
Need an Enterprise Process Architecture
Comprehensive Process Documentation
Motivation
Compliance Requirements
Developing Global Standards
Mergers and Acquisitions
“We like to model”

13. 111.0
Develop
Vision and
Strategy 2.0
Design and
Develop
Products and
Services 3.0
Market and
Sell Products
and Services 4.0
Deliver
Products and
Services 5.0
Manage
Customer
Service
Operating Processes6.0 Develop and Manage Human Capital 7.0 Manage Information Technology 8.0 Manage Financial Resources 9.0 Acquire, Construct, and Manage Property 10.0 Manage Environmental Health and Safety 11.0 Manage External Relationships 12.0 Manage Knowledge, Improvement, and Change
Management and Support Processes
Source: APQC (2007)
Enterprise Process Map: APQC

14. Roles &
Responsi-
bilities
Process
Owners
Process
Managers 12
Enterprise Process Map: Fortune 500
Methods OrganizationLevel
concept
Convention
handbook
Modeling
handbook
Corporate
Modeling
Service

15. EPM - Facility Management
Der relevante
Users
Shareholders
Market
Owners
Customer
Der bearbeitete
Customers
Market
Project
study
Planning
Resource-
disposition
Technical
Services
Administrative
Services
Personnel
Services
Marketing
and
Acquisition
Market Activities Enactment of Services
Consulting
Contracting
Informations-
verarbeitung
Information-
processing
Informations-
verarbeitung
Material-
management
Informations-
verarbeitung
Accounting,
Finance
Informations-
verarbeitung
Legal Issues
Human Resources
Asset
Management
Controlling
Enterprise
Management
Process Management
Portfolio
Reporting
Strategical /Operative
Mgmt.
Users
Shareholders
Owners

16. 14
EPM - RetailStrategy
Management Accounting
IT Governance
Warehouse
Marketing
Sales
Distribution
Billing
Accounts
Receivable
Accounts
Payable
Purchasing
Order
Management
Receiving
Invoice
Auditing
General Accounting and Asset Management
Cost Accounting
Human Resources

17. Reference Models
Core Process Example: Supply-Chain Operations Reference Model
(SCOR)
Defines high-level process steps in the supply chain
Can be customized at lower levels to reflect organization-specific details
Provides common terminology and structure for operations in different lines of
business
Support Process Example: IT Infrastructure Library (ITIL)
Defines activities for IT support organizations such as helpdesk activities
For most businesses this is not an area of competitive differentiation
Standard operating procedures and system support ensure the use of best
practices 15
It is not necessary to create new models in
all areas
Option: Use industry-specific reference
models that describe processes in a
particular domain

18. Process Abstraction Levels
16
Process Groupings
Business Activities
Core Processes
Business Process Flows
Detailed Process Flows
Level A
Level B
Level C
Level D
Level E
Level F
ObjectivesBusiness Activities
Delivery Units Products
Processes Systems
Scorecard
Sub Processes Roles System Functions
Operational Process Flows
Detailed Processes TransactionsDetailed Roles
Delivery Teams
Ownership Services
Process Groupings
Core processes
Source: British Telecommunications plc 2006

19. Process Abstraction Levels
16
Process Groupings
Business Activities
Core Processes
Business Process Flows
Detailed Process Flows
Level A
Level B
Level C
Level D
Level E
Level F
ObjectivesBusiness Activities
Delivery Units Products
Processes Systems
Scorecard
Sub Processes Roles System Functions
Operational Process Flows
Detailed Processes TransactionsDetailed Roles
Delivery Teams
Ownership Services
Process Groupings
Core processes
Source: British Telecommunications plc 2006What How

20. Detailed Processes TransactionsDetailed Roles
ObjectivesBusiness Activities
Delivery Units Products
Processes Systems
Scorecard
Sub Processes Roles System Functions
Delivery Teams
Ownership Services
Process Groupings
Core processes
Enterprise Process Architecture
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Enterprise Process Map
Process Levels
Strategy
Management
IT
Warehous
Marketing
Sales
Distributio
Billing
AccountsAccounts
Purchasing
Order
Receiving
Invoice
General Accounting and Asset
Cost Accounting
Human Resources

21. Enterprise Process Architecture:
Benefits
Allow to short-circuit process identification phase
Provide neutral map for navigation along processes
Standardize terminology across the enterprise
Enable benchmarking across organizations
18

22. “We’re doing SOA,
let’s figure out this
BPM stuff later”
Typical Procedure
Analyze existing systems
Establish basic services
Implement Enterprise Services Bus
Try to identify processes that can leverage
the services
Problem
Without processes there is no point of
reference for
services abstraction
granularity
usage frequency 19

23. SOA - What Programmers See
20

24. Services - What Architects See
21

25. What the Customer Wants
22

26. 23Capabilities

27. 24Alternative
Implementation

28. 25What are you really good at?

29. 26Customers don’t care about
processes per se, but about
their value proposition

30. Learn from Outside
Usage-based Insurance applies
Telecom Billing Techniques
Progressive: Autograph Prototype
‘99-’01
Norwich Union:
Free GPS
Rate depends on mileage driven
Precondition: Flexible billing process
27

31. Underwriting On Demand
Text2Insure
Provide Travel and Car Insurance via SMS
Provides Quote within 60 seconds
Reply “BUY”
Call from agent within 10 min for payment
details
Cover2go
Accidental Death Insurance
Fees taken from cell phone bill
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32. 29From Core to Commodity Treat the process as a service
Define a standard interface
Think about creating value outside
and at the front-end

33. Takeaways
Technology enables Process Change
Processes define Services
Core Processes become Commodities
Efficient Process Management creates room for problem solving
Industrialized Processes enable Innovation
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34. Michael zur Muehlen, Ph.D.
Center of Excellence in Business Process Innovation
Howe School of Technology Management
Stevens Institute of Technology
Castle Point on the Hudson
Hoboken, NJ 07030
Phone: [phone]
Fax:[phone]
E-mail: [email protected]
Web: stevens.edu/BPM
slides: slideshare.net/mzurmuehlen

Thank You - Questions?
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