Definition of Business Process

A business process as a collection of inter-related events, activities, and decision points that
involve a number of actors and objects, which collectively lead to an outcome that is of value to
at least one customer.
Definition of Business Process Management
BPM as a body of methods, techniques, and tools to identify, discover, analyze, redesign,
execute, and monitor business processes in order to optimize their performance.

Related Disciplines
 Total Quality Management (TQM)
 Focus on continuously improving and sustaining the quality of
products and services.
 TQM puts emphasis on products and services themselves, while BPM
focuses on improvement of processes.
 Applications of TQM are primarily in manufacturing while BPM
more in service organizations.
 Operations Management
 Concerned with managing physical and technical functions of
organization, particularly those relating to production and
manufacturing.
 Using probability theory, queuing theory, decision analysis,
mathematical modeling, and simulation for optimizing efficiency of
operations.
 Such techniques are also useful in.
 Often concerned with controlling an existing process, while BPM
making changes to an existing process in order to improve it.
 Lean
 Originates from manufacturing, in particular Toyota Production
System.
 Eliminates waste, i.e., activities that do not add value to the customer.
  BPM puts more emphasis on use of information technology as a tool
to improve business processes and to make them more consistent and
repeatable.
 Six Sigma
 Originates from manufacturing, in particular from production
practices at Motorola.
 Focuses on minimization of defects (errors).
 Strong emphasis on measuring output of processes, especially in terms
of quality.
 Popular approach to blend Lean with Six Sigma, leading to Lean Six
Sigma.

Purchasing process at Ford at the initial stage

Purchasing process at Ford after redesign

Job Functions of Process Owner

How to ? Establishing Process Thinking in Organizations
 Establish BPM Team
 Describe Process Architecture
 Define Process Performance Measures
 Discover and Model Processes
 Analyze, Redesign, Implement and Monitor Processes
 Make Use of Process-Aware Information Systems
(important) Example: Process model for the initial fragment of the equipment
rental process
The BPM Lifecycle

Process
identification

Process architecture

Conformance and Process As-is process

performance
discovery model
insights

Process Process
monitoring analysis

Executable Insights on
process weaknesses and
model their impact

Process Process
implementation To-be process redesign
model

Stakeholders in the BPM Lifecycle

 Management Team:
 Chief Executive Officer (CEO) responsible for overall business
success.
 Chief Operations Officer (COO) responsible for defining the way
operations are set up, sometimes Chief Process Officer (CPO) or
Chief Process and Innovation Officer (CPIO).
 Chief Information Officer (CIO) responsible for operation of
information system infrastructure.
 Chief Financial Officer (CFO) responsible for overall financial
performance of the company.
  Human Resources (HR) director plays key role in processes that
involve many process participants.
 Process Owners:
 Process owner is responsible for efficient and effective operation of a
given process, including
 Planning and organizing, i.e. defining performance measures and
objectives as well as initiating and leading improvement projects.
 Monitoring, i.e. ensuring that performance objectives are met, and
taking corrective actions.
 Process owner is involved in process modeling, analysis, redesign,
implementation, and monitoring.
 Process Participants:
 Perform activities of business process on day-to-day basis.
 Conduct routine work according to the standards and guidelines of the
company.
 Coordinated by process owner, who is responsible for non-routine
aspects of process.
 Involved as domain experts during process discovery and process
analysis.
 Support redesign activities and implementation.
 Process Analysts:
 Conduct process identification, discovery, analysis, and redesign.
 Coordinate implementation and monitoring.
 Report to management and process owners
 Have business or IT background.
 Process Methodologist:
 Provides advice on methods, techniques and software tools.
 Coordinates technical training.
  System Engineers:
 Translate requirements into system design
 Responsible for implementation, testing and deployment.
 BPM Group (also BPM Center of Excellence):
 Responsible for preserving project knowledge and documentation.
 Maintain process architecture.
 Prioritize process redesign projects.
 Align the BPM efforts with strategic goals.
 Most common in large organizations with several years of BPM
experience.

Chapter # 2
Balanced Scorecard (Kaplan & Norton)
Learning and
Financial Customer Internal
Growth
Perspective Perspective Perspective
Perspective
Product/Service Operations Management
Attributes Processes
Improve Cost
Culture
Structure Price Supply Distribution
Production Risk Mgmt.
Quality

Increase Asset Availability Customer Management

Utilization Processes
Selection Leadership
Selection Retention
Functionality Acquisition Growth
Long-Term
Shareholder
Value Innovation
Relationship Processes
Alignment
Service Opportunity Design
Expand Revenue Research Launch
Opportunities Partnership

Regulatory and Social

Processes
Enhance Image Teamwork
Customer Value Environment Employment
Brand Safety/Health Community
Enterprise Architecture according to TOGAF
 Organizational perspective:
actors, roles, and organizational structure.
 Product perspective:
products and services along with their relationships.
 Business process perspective:
process architecture.
 Data perspective:
informational entities and their relationships.
 Application perspective:
different pieces of software with their dependencies.
 Technical infrastructure:
computer hardware and communication networks.

The Process Checklist

How to check process checklist or poor process checklist ?
To prevent poor scoping decisions, it is useful to consider the following process
checklist:
 Is it a process at all?
 It must be possible to identify main action, which is applied to a
category of cases.
 Name is of form verb + noun.
 Can the process be controlled?
 Repetitive series of events and activities to execute individually
observable cases.
 Without a clear case notion, process management is not feasible.
 Also, without any sense of repetition, a group of business activities
may better qualify as a project than as a business process.
  Is the process important enough to manage?
 There is customer who is willing to pay for outcomes,
 Organization that carries out the process would be willing to pay
another party for taking over, or
 Legal, mandatory framework compels an organization to execute it.
 Is the scope of the process not too big?
 1:1 relation between initial event and activities.
 Is the scope of the process not too small?
 Rule of thumb: there should be at least three different actors –
excluding the customer – involved.
 If there are no handoffs between multiple actors or systems, there is
little that can be improved using BPM methods.

Process Categories
Management Processes

Define Vision Develop Strategy Implement Manage Risk

Strategy

Core Processes

Manage
Procure Procure Market Deliver
Customer
Materials Products Products Products
Service

Support Processes

Manage
Manage Personnel Information Manage Assets

Exercise 2.3: University

 What are core, support, and management processes of a university?
 Sequence

Manage
Procure Procure Market Deliver
Customer
Materials Products Products Products
Service

Decomposition Specialization

Procure Handle Job

Products Application

Handle Job Handle Job

Process Assemble
Application Application
Parts Parts
(Austria) (Germany)

Process Architecture
Generic Process Architecture

Level 1
Process
Landscape
(incl. Value Chains)
Level 2
Business Processes
(e.g. BPMN)
Level 3+
Sub-processes and Tasks
(e.g. BPMN)

How to define Process Landscape Model?

1. Clarify terminology:
 Define key terms.
 Use organizational glossary.
  Use reference models.
 Ensure that stakeholders have a consistent understanding of process
landscape model.
2. Identify end-to-end processes:
 Those processes interface with customers and suppliers.
 Goods and services that organization provides are good starting point.
 Properties help to distinguish processes, including: Product type,
Service type, Channel, Customer type.
3. For each end-to-end process, identify its sequential processes:
 Identify the internal, intermediate outcomes of end-to-end process.
 Perspectives help set boundaries: Product lifecycle, Customer
relationship, Supply chain, Transaction stages, Change of business
objects, Separation.
4. For each business process, identify its major management and support
processes:
 What is required to execute the previously identified processes.
 Typical support processes are management of personnel, financials,
information, and materials.
 However, these can be core processes if they are integral part of
business model.
 Management processes are usually generic.

5. Decompose and specialize business processes:

 Processes of process landscape should be further subdivided into
abstract process on Level 2.
 Further subdivision until processes can be managed autonomously by
single process owner.
 Considerations when this subdivision should stop: Manageability and
Impact.
 6. Compile process profile:
 Each of the identified processes should be described using process
profile.
 Process profile supports definition of boundaries, vision performance
indicators, resources, etc.
7. Check completeness and consistency:
 Reference models can be used to check whether all major processes
are included.
 Reference models can help to check consistency of terminology.
 Check whether all processes can be associated with functional units of
organization chart and vice versa.

Process Selection
Selection Criteria
 Strategic Importance:
 Find out which processes have the greatest impact on the strategic
goals.
 Consider profitability, uniqueness, or contribution to competitive
advantages.
 Select those processes for process management that relate to strategy.
 Health:
 Determine which processes are in deepest trouble.
 These processes may profit the most from BPM initiatives.
 Feasibility:
 Determine how susceptible process is to BPM initiatives, incidentally
or continuously.
 Culture and politics may be obstacles.
  BPM should focus on those processes where it is reasonable to
achieve benefits.
Process Performance Measures
Performance Measures
 Time
 Cost
 Quality
 Flexibility

Process Portfolio
A process portfolio is a collection of the processes that an organization
performs to deliver value to its customers and stakeholders. It serves
several important purposes:
Defining Scope: The first step in creating a process portfolio is to define
its scope. This involves identifying the boundaries, criteria, and
categories of the processes. Organizations can group processes based on
dimensions such as value streams, functions, products, services,
customers, or regions. The scope should align with strategic objectives,
stakeholder expectations, and regulatory requirements.
Assessing Performance: Once the scope is established, organizations
assess the performance of their processes. This involves measuring how
well processes meet goals and standards. Metrics such as quality, speed,
cost, efficiency, effectiveness, customer satisfaction, and compliance are
used to quantify process outcomes. Additionally, analysis helps identify
process problems, root causes, risks, and improvement opportunities1.
Prioritizing Initiatives: Based on the assessment, organizations
prioritize improvement initiatives within their process portfolio. This
ensures that resources are allocated effectively to address critical areas
and enhance overall performance1.
Execution and Review: Organizations execute their portfolio plan,
monitor outcomes, and refine strategies as needed. The process portfolio
serves as a guide for aligning business strategy with operational
capabilities.

Process Portfolio

High Selection Focus Feasibility

Loan
Rating
Contract
Controlling Prepatation Low
Loan
Decision
Loan Market
Medium
Importance

Evaluation

Handling
High
Payments

Loan
Loan Planning
Application
Low

Poor Health Good

 Chapter # 3
Business Process Model and Notation (BPMN)
A BPMN process model is a graph consisting of four types of core elements

start end
activity event gateway sequence
flow

Order-to-cash

Reject order
Items not in
Order
stock
rejected
Check stock
availability
Purchase
order Items in
received stock Confirm Emit Archive
Ship goods
order invoice order
Order
fulfilled
 BPMN core elements

Activities capture work performed in a process

 Different types of activities
activity

start end
event Events represent the process’ triggers (start event) and
event outcomes (end event).

Gateways capture forking and joining paths in the

control flow.
 Different types of gateways
gateway Sequence flows represent the order in which
activities and events will be performed.
They can be assigned a condition to distinguish
sequence
flow
 Mapping, Abstraction, and Purpose of a Model
Models are abstractions from real world phenomena,
developed for the purpose of reducing overall complexity.
Models aggregate information and document only relevant aspects of the real
world

Models are being developed:

1. in a specific modelling subject
2. for a specific target audience
3. with a specific modelling purpose in mind

A little more on gateways: XOR Gateway

An XOR Gateway captures decision points (XOR-

split) and points where alternative flows are merged
(XOR-join)
condition

XOR-split  takes one outgoing branch

¬ condition

XOR-join  proceeds when one incoming branch

has completed
Invoice checking process

A little more on gateways: AND Gateway

An AND Gateway provides a mechanism to

create and synchronize “parallel” flows.

AND-split  takes all outgoing branches

AND-join  proceeds when all incoming

branches have completed
 Example: AND Gateway
Airport security check

Order-to-cash

Reject order
Items not in
stock Order
rejected

Check stock
Send invoice
availability
Purchase
order Items in
received stock
Archive
Confirm order
order
Order
fulfilled

Ship goods
 OR Gateway

An OR Gateway provides a mechanism to create and

synchronize n out of m parallel flows.
cond1

OR-split  takes one or more branches depending

on conditions
condn

OR-join  proceeds when all active incoming

branches have completed

Order distribution process

 Components of a modelling language

Modelling Language
Vocabulary

Syntax Semantics Notation

Vocabulary: set of modelling elements of the language (BPMN: activities,

gateways, events…)
Syntax: set of rules to govern how these elements can be combined (BPMN: start
events only have outgoing sequence flows whereas end events only have incoming
sequence flows).
Semantics: bind these elements, including their textual descriptions, to a precise
meaning (in BPMN: activities model something actively performed during the
business process, while XOR gateways model exclusive decisions and simple
merging points).
Notation: set of graphical symbols for the visualisation of the elements (in BPMN:
labelled rounded boxes to depict activities and the circles with a thin border to
depict start events).

Business Objects (aka artefacts)

Can be:
 Physical or digital information artefacts (e.g. an order on paper, an
invoice on PDF)
 Physical material (e.g. a box containing the ordered goods)
Business Objects in BPMN
A Data Object captures an artefact required (input) or produced (output)
by an activity.
 Can be physical or electronic
 A Data Store is a place containing data objects that must be persisted beyond
the duration of a process instance.

 It is used by an activity to store (as output) or retrieve (as input) data objects.

BPMN Text Annotations

Resources
Active resources:
 Process participant
 Software system
 Equipment
Resource class:
A group of (active) resources that are interchangeable, e.g. a role, an organizational
unit or the whole organization.

BPMN Elements – Pools & Lanes

Pool
Captures a resource class. Generally used to model a business party (e.g. a whole
company)
Lane
Captures a resource sub-class within a resource class by partitioning a pool.
Generally used to model departments (e.g. shipping, finance), internal roles (e.g.
Manager, Associate), software systems (e.g. DBMS, CRM) or equipment (e.g.
Manufacturing plant)

BPMN Elements – Message Flow

A Message Flow represents a flow of information or materials between two
process parties (Pools)
A Message Flow can connect:
• directly to the boundary of a Pool  captures a message to/from that party
• to a specific activity or event within that Pool  captures a message that
triggers a specific activity/event within that party
BPMN Elements – Start Message Event
The start message event triggers a process by the receipt of a message when an
incoming message flow is connected to the event
Pools, Lanes and Message Flows: Syntax
1. The Sequence Flow cannot cross the boundaries of a Pool
2. Both Sequence Flow and Message Flow can cross the boundaries of Lanes
3. A Message Flow cannot connect two flow elements within the same pool

Black box or White box?

Black Box View (Public View): A black box represents a component or
system from an external perspective. It is like looking at a sealed
container without knowing what’s inside.
Characteristics:
No internal details: In a black box view, we focus solely on the
interface of the component. We don’t see its internal workings or
implementation details.
High-level abstraction: It provides a big-picture understanding of how
the component interacts with other components.
Use cases: Black boxes are useful for showing architectural relationships
and understanding how components connect.
Example: When you buy a product (like a smartphone), you get a black
box – you know what it does (interface), but not how it’s built internally.
White Box View (Private View): A white box view reveals the internal
structure of a component. It’s like opening the sealed container and
examining its contents.
Characteristics:
Full transparency: In a white box view, we see the classes, interfaces,
and other components that contribute to the component’s functionality.
Detailed insight: It provides a deep understanding of how the
component achieves its purpose.
Use cases: White boxes are useful for designing, debugging, and
optimizing components.
Example: Open-source software projects are white boxes – you can
explore their internals and even contribute to them

When are messages sent or received?

• A Send activity will send the outgoing message upon
activity completion
• A Receive activity won’t start until the incoming message
has been received
Note: the order of the message flows w.r.t. an activity is
irrelevant, the above rules always hold

Process decomposition
An activity in a process can be decomposed into a “sub-process”
Use this feature to:
1. Improve understanding by breaking down large
models
2. Identify parts that should be:
  repeated
 executed multiple times in parallel
 interrupted, or
 compensated

The refactored model

Value chain modelling
Chain of (high-level) processes an organization performs in order to achieve a
business goal, e.g. deliver a product or service to the market.

Business
process

“is predecessor of”

Process Reuse
By default, a sub-process is “embedded” into its parent process (i.e. it is stored
within the same file)
In order to maximize reuse, it is possible to “extract” the sub-process and store it as
a separate file in the process model repository
Such a sub-process is called “global” model, and is invoked via a “call” activity
Quote-to-order