Business

Process
Engineering
Week # 2
MOMNA ZANEB
Week 2 Agenda
• Components of Business Process
• Events , Activities , Tasks ,Decision Points
• Actors , Outcomes

• Business Process Management

• Basic Definition

• Business Process Management Lifecycle

• Process Identification
• Process Discovery
Business Processes
What companies do for customers whenever they deliver:
◦ a service; or
◦ a product

The way processes are designed and performed affects:

◦ “quality of service/product” that customers perceive
◦ the efficiency with which services are delivered.

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Business Processes
But what happens if that process
isn’t achieving the result
OR
if it’s not achieving it very effectively?

◦ Every business has goals, but the interesting part (and what business
process management actually) is the exact steps a business will take to
achieve those goals.

4
 Components of a Business Process
A business process encompasses a number of events and activities.

⮚Events correspond to things that happen atomically, meaning that they have no duration. The
arrival of an equipment at a construction site is an event.

⮚An event is a specific instant of time, which marks the start or end of an activity. Event
consumes neither time nor resource.

⮚An event may trigger the execution of series of activities.

⮚An activity is the actual performance of the task and requires time and resources for its
completion.

⮚When an activity is rather simple and can be seen as one single unit of work, we call it a task.

⮚A single unit of work is called a task

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 Components of a Business Process
⮚The activity proceeding to any given activity is called the predecessor activity

⮚The activity succeeding to any given activity is called the successor activity

⮚An activity has many tasks

Example:

The arrival of an equipment at a construction site is an event. This event may trigger the execution of series of
activities. when a piece of equipment arrives, the site engineer inspects it. This inspection is an activity, in the
sense that it takes time. if the inspection that the site engineer performs is quite simple e.g. just checking that
the equipment received corresponds to what was ordered—we can say that the equipment inspection is a task.

If on the other hand the equipment inspection requires many steps—such as checking that the equipment
fulfills the specification included in the purchase order, checking that the equipment is in working order, and
checking the equipment comes with all the required accessories and safety devices—we will call it an activity

6
 Components of a Business Process
Decision Points: Points in time when a decision is made that affects the way the process
is executed.
Example: as a result of the inspection, the site engineer may decide that the equipment
should be returned or that the equipment should be accepted. This decision affects what
happens later in the process
Decisions represent the explicit rules that are required to maintain consistency in
customers experience.
◦ Consider a leave granting process in any big organization. There are explicit rules which define the
number of leaves that a person can take as well as the procedure to get them approved. Although, it looks
like a manager is taking the decisions with regards to granting leave, all they are doing is following a
pre-defined procedure.
◦ No matter who the manager is, the decisions will always remain consistent

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 Components of a Business Process
A process also involves a number of:
◦ Actors e.g., human actors, organizations, or software systems acting on behalf of
human actors or organizations
◦ Physical objects e.g., equipment, materials, products, paper documents
◦ Immaterial objects e.g., electronic documents and electronic records

The execution of a process leads to one or several outcomes. Ideally, an

outcome should deliver value to the actors involved in the process
Positive outcome – the value is delivered to the actors involved
Negative outcome – the value is not achieved or is only partially achieved

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 Issue
delivery Package
receipt Load products Issue
truck invoice

Prepare
shipment
Schedule Check &
Schedule
payment confirm
delivery
PO
Unload
truck

Notify
Obtain
shipment
PO
confirm.
Match
incoming
Check Request
payment
Invoice PO change

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 Check &
PO Package Load Notify Issue Match Payment
confirm
received products truck shipment invoice payment made
PO

Obtain Issue
PO Schedule Unload Check Schedule Goods
PO delivery
issued delivery truck invoice payment arrived
confirm. receipt

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 Your turn…
Load Take Serve
dish- order meal
Bring
washer
menu

Collect
payment
Collect
Collect Unload
Brush laundry
laundry dish-
grills
washer

Clean
Sweep kitchen
& mop surfaces Greet &
Present
seat
bill

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Customer Greet & Bring Take Serve Present Collect Customer
arrived seat menu order meal bill payment paid

Load Clean Unload

Kitchen Brush Collect Sweep Kitchen
dish- kitchen dish-
is dirty grills laundry & mop is clean
washer surfaces washer

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A business process is…
a chain of events, activities and decisions
...involving several actors and objects,
….triggered by a need
and leading to an outcome that is of value to a customer.

Examples:
• Order-to-Cash
• Procure-to-Pay (aka Purchase-to-Pay)
• Application-to-Approval
• Issue-to-Resolution

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 “My washing machine doesn’t work…”
Negative outcomes (value-reducing): Positive outcomes (value-adding):
• Fault not repaired in a timely manner • Fault repaired immediately with minor
• Fault repaired but customer pays more intervention
than expected • Fault repaired, covered by warranty

Insurance
Call Centre Company
Technician

Customer Customer
Customer
Parts
Service Store
Dispatch
Centre

VALUE
issue-to-resolution process
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Exercise 1.1 Consider the following process for the admission of graduate students at a university. In order to
apply for admission, students first fill in an online form. Online applications are recorded in an information
system to which all staff members involved in the admissions process have access to. After a student has
submitted the online form, a PDF document is generated and the student is requested to download it, sign it,
and send it by post together with the required documents, which include:
• Certified copies of previous degree and academic transcripts. • Results of English language test.
• Curriculum vitae.
When these documents are received by the admissions office, an officer checks the completeness of the
documents. If any document is missing, an e-mail is sent to the student. The student has to send the missing
documents by post. Assuming the application is complete, the admissions office sends the certified copies of the
degrees to an academic recognition agency, which checks the degrees and gives an assessment of their validity
and equivalence in terms of local education standards. This agency requires that all documents be sent to it by
post, and all documents must be certified copies of the originals. The agency sends back its assessment to the
university by post as well. Assuming the degree verification is successful, the English language test results are
then checked online by an officer at the admissions office. If the validity of the English language test results
cannot be verified, the application is rejected (such notifications of rejection are sent by e-mail). Once all
documents of a given student have been validated, the admission office forwards these documents by internal
mail to the corresponding academic committee responsible for deciding whether to offer admission or not. The
committee makes its decision based on the academic transcripts and the CV. The committee meets once every 2
to 3 weeks and examines all applications that are ready for academic assessment at the time of the meeting. At
the end of the committee meeting, the chair of the committee notifies the admissions office of the selection
outcomes. This notification includes a list of admitted and rejected candidates. A few days later, the admission
office notifies the outcome to each candidate via e-mail. Additionally, successful candidates are sent a
16
confirmation letter by post.
With respect to the above process, consider the following questions:
1. Who are the actors in this process?
2. Which actors can be considered to be the customer (or customers) in this
process?
3. What value does the process deliver to its customer(s)?
4. What are the possible outcomes of this process?
18
 Business Process Management
Business Process Management (BPM) is the art and science of overseeing how work is
performed in an organization to ensure consistent outcomes and to take advantage of
improvement opportunities.
In this context, the term “improvement” may take different meanings depending on the
objectives of the organization. Typical examples of improvement objectives include
reducing costs, reducing execution times and reducing error rates.
Improvement initiatives may be on-off, but also display a more continuous nature.
Importantly, BPM is not about improving the way individual activities are performed.
Rather, it is about managing entire chains of events, activities and decisions that
ultimately add value to the organization and its customers. These “chains of events,
activities and decisions” are called processes

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Business Process Management
A collection of inter-related events, activities and decision points that involve a number of actors
and objects, and that collectively lead to an outcome that is of value to at least one customer.

Business Process Management is “body of methods, techniques and tools to

discover, analyze, redesign, execute and monitor business processes.”

BPM asks: “is this really the best way to do it”

Processes are managed when they’re kept up to date, tested and optimized. Since the nature of

business is always changing because companies change size quickly and the tools they use

change, processes have a terrible tendency to become outdated.

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Hierarchy of Business Process
The step-by-step plan for achieving your business goals - BPM

Business process management = creating and optimizing the perfect plans to

achieve your business goals.
It’s not a technology, or a one time thing. You don’t ever consider your
processes ‘fully managed’ or optimized. Whether or not someone in the
company has it in their job title or description, business processes are in a
constant state of flux. BPM is always questioning the current state of
operations.
The step-by-step plan for achieving your business goals - BPM
An important feature of BPM is ownership and collaboration.
Processes should be owned by people, and those people are responsible for updating and
optimizing them. This makes sure the processes actually get used, too.
You should get other people to use them, offer their feedback and apply updates. Other-wise you
will become center of attention/failure
Business Process Management
The best people to be in charge of creating and maintaining their own
processes are those responsible for doing the tasks. Naturally, someone is
responsible for keeping the writing and editing processes up to date. The
support team takes care of the support processes, and anyone else who
uses these processes can make edits and suggestions to optimize them,
based on collective feedback
process management ≠ process automation.

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Business Process Management
A body of methods, techniques and tools to discover, analyse,
redesign, execute and monitor business processes.

A discipline of improving a business process from end to

end by analysing it, modelling how it works in different
scenarios, executing environments, monitoring the
improved process and continually optimizing it.

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 Why Business Process Management?
Symptoms of Poor Business Process Management and Design −
▪ No standard process/method for addressing how to define business
requirements and when to improve business processes −
▪ When automation of processes is commissioned, “Business "says that they
do not always get what they think they have asked for −The processes
used to document and communicate business processes and requirements
are neither easy nor documented
▪ Our business programs frequently exist in a culture of reacting to cross-
functional problems/emergencies −
▪ IT has responsibility for creating and maintaining business process flows,
business requirements and business rules
Process performance
If you had to choose between two services, you would typically choose the one that
is:

Faster
Cheaper
Better
Process performance
Three dimensions of process performance

Time
Cost
Quality
BPM Related Disciplines
▪TQM
▪Operations Management
▪ Lean
▪ Six Sigma

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 BPM Related Disciplines - TQM
Total Quality Management (TQM) is an approach that both historically preceded and
inspired BPM. The focus of TQM is on continuously improving and sustaining the
quality of products, and by extension also of services. In this way, it is similar to BPM in
its emphasis on the necessity of ongoing improvement efforts.
But where TQM puts the emphasis on the products and services themselves, the view
behind BPM is that the quality of products and services can best be achieved by
focusing on the improvement of the processes that create these products and services.
It should be admitted that this view is somewhat controversial, as contemporary TQM
adepts would rather see BPM as one of the various practices that are commonly found
within a TQM program. Not so much a theoretical distinction but an empirical one is that
applications of TQM are primarily found in manufacturing domains—where the
products are tangible—while BPM is more oriented to service organizations

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 Operations Management & Lean
Operations Management is a field concerned with managing the physical and technical
functions of a firm or organization, particularly those relating to production and
manufacturing. Probability theory, queuing theory, decision analysis, mathematical modeling,
and simulation are all important techniques for optimizing the efficiency of operations from this
perspective. What is rather different between operations management and BPM is that
operations management is generally concerned with controlling an existing process without
necessarily changing it, while BPM is often concerned with making changes to an existing
process in order to improve it.
Lean is a management discipline that originates from the manufacturing industry, in
particular the engineering philosophy of Toyota. One of the main principles of Lean is the
elimination of waste, i.e. activities that do not add value to the customer. The customer
orientation of Lean is similar to that of BPM and many of the principles behind Lean have been
absorbed by BPM. In that sense, BPM can be seen as a more encompassing discipline than Lean.
Another difference is that BPM puts more emphasis on the use of information technology as a
tool to improve business processes and to make them more consistent and repeatable.
 Lean Principles
•Eliminate waste.
•Build quality in.
•Create knowledge.
•Defer commitment.
•Deliver fast.
•Respect people.
•Optimize the whole
 Six Sigma
Six Sigma is another set of practices that originate from manufacturing, in particular
from engineering and production practices at Motorola. The main characteristic of Six
Sigma is its focus on the minimization of defects (errors). Six Sigma places a strong
emphasis on measuring the output of processes or activities, especially in terms of
quality. Six Sigma encourages managers to systematically compare the effects of
improvement initiatives on the outputs.
In practice, Six Sigma is not necessarily applied alone, but in conjunction with other
approaches. In particular, a popular approach is to blend the philosophy of Lean with the
techniques of Six Sigma, leading to an approach known as Lean Six Sigma. Nowadays,
many of the techniques of Six Sigma are commonly applied in BPM as well.
Business Process Management Life Cycle
The BPM lifecycle Process
identification

Process
Process architecture
architecture

Conformance
Conformance and
and Process As-is
As-is process
process
performance
performance insights
insights discovery model
model

Process
monitoring and Process
controlling analysis

Executable
Executable Insights
Insights on
on
process
process weaknesses
weaknesses and
and
model
model their
their impact
impact

Process Process
implementation To-be
To-be process
process redesign
model
model

35
BPM Lifecycle Activities
5 Step Activities 6/6+ Step Activities
Designing ⚫ Analyze
Modelling ⚫ Model
Executing/implementing ⚫ Implement
⚫ Monitor
Monitoring & Controlling
⚫ Manage
Optimization ⚫ Automate

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Design
Process Design encompasses both the identification of existing processes
and the design of "to-be" processes.
The aim is to ensure that a correct and efficient theoretical design is
prepared.
The proposed improvement could be in human-to-human, human-to-
system, and system-to-system workflows, and might target regulatory,
market, or competitive challenges faced by the businesses.
Design
Process Identification - In this phase, a business problem is posed, processes relevant to the
problem being addressed are identified, delimited and related to each other. The outcome of
process identification is a new or updated process architecture that provides an overall view of
the processes in an organization and their relationships.
Process Discovery - (also called as-is process modeling). Here, the current state of each of
the relevant processes is documented, typically in the form of one or several as-is process
models
Process Analysis - In this phase, issues associated to the as-is process are identified,
documented and whenever possible quantified using performance measures. The output of
this phase is a structured collection of issues. These issues are typically prioritized in terms of
their impact, and sometimes also in terms of the estimated effort required to resolve them
Process Redesigning - (also called process improvement). The goal of this phase is to
identify changes to the process that would help to address the issues identified in the previous
phase and allow the organization to meet its performance objectives. To this end, multiple
change options are analyzed and compared in terms of the chosen performance measures.
This entails that process redesign and process analysis go hand-in-hand: As new change
options are proposed, they are analyzed using process analysis techniques. Eventually, the
Modeling
Modeling takes the theoretical design and introduces combinations of
variables (e.g., changes in rent or materials costs, which determine how the
process might operate under different circumstances).
The output of this phase is typically a digital form of to-be process model,
which serves as a basis for the next phase.
BPM modeling or process modeling can also be defined as the graphical
illustration that depicts the steps in a process.
It also involves running "what-if analysis" on the processes: "What if I have
75% of resources to do the same task?" "What if I want to do the same job for
80% of the current cost?".
Execution/Implementation
Organizational Change Management
Process Automation is:
◦ to develop/purchase an application that executes the required steps of the process
◦ to use a combination of software and human intervention - more complex => difficult
documentation process.
Developed software enables the full BP to be defined in a computer language
directly executed by the computer. The system will use services in connected
applications to perform business operations, or, when a step is too complex to
automate, will ask for human input.
Monitoring & Controlling
Collection of relevant data (from redesigned process )
Determine how well is the process performing
Identification of bottlenecks , recurrent errors/deviations w.r.t intended behavior
Correction of identified errors
Cycle would be repeated continuously as new errors will arise in the process.
Tracking of individual processes, so, that information on their state can be easily
seen, and statistics on the performance of one or more processes can be provided.
The degree of monitoring depends on what information the business wants to
evaluate and analyze and how business wants it to be monitored, in real-time, near
real-time or ad-hoc.
Optimization
Process optimization includes retrieving process performance information
from modeling or monitoring phase; identifying the potential or actual
bottlenecks and the potential opportunities for cost savings or other
improvements; and then, applying those enhancements in the design of the
process.
Importance of BPM
Allows organizational leaders to understand the various processes that happen within their
organization, analyse them from end to end and improve them on an ongoing basis
Allows organizational leaders to optimize end-to-end business processes to have a greater impact on
outcomes
Well-executed BPM can reduce waste, cut down on errors, save time and generate better services and
products
Well-executed BPM continually delivers improvements
Realize bigger organizational goals
Move toward digital transformation

44
Business Process Management Examples
HR Department
◦ If the organization’s onboarding process is too complex and chaotic?
◦ Is HR department asking the candidates to fill out paper forms that make them exhausted?

Sales Department
◦ Spends significant amount of time in coordinating with the Accounts Receivable team to
get sales invoices approved. A small typo can ruin the lives of salespeople

45
Types of BPM Systems
Human-Centric BPM
◦ Primarily executed by humans; have a lot of approvals and tasks performed by
individuals
Document-Centric BPM
◦ When a document e.g., a contract or agreement is at the heart of the process.
Enable routing, formatting, verifying, and getting the document signed as the tasks
pass along the workflow
Integration-Centric BPM
◦ Handles processes that primarily jump between existing systems e.g., HRMS,
CRM, ERP without much human involvement. BPM & SOA

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BPM Core Concepts
BPM is a management discipline and a set of enabling technologies
BPM addresses end-to-end work and distinguishes between sets of subprocesses, tasks, activities and
functions
BPM is a continuous, ongoing set of processes focused on managing an organization's end-to-end
business processes
BPM includes the modelling, analysis, design and measurement of an organization's business
processes
BPM requires a significant organizational commitment, often introducing new roles, responsibilities
and structures to traditional functionally oriented organizations
BPM is technology enabled with tools for visual modelling, simulation, automation, integration,
control and monitoring of business processes and the information systems which support these
processes
Management Discipline and Enabling Technologies
BPM acronym used loosely and its meaning varies depending upon the context
Software companies often refer to BPM to describe the capabilities of a particular product or
technology
Practitioners, management consultants and academics typically discuss the process and management
discipline of BPM
Firstly BPM is a management discipline and process for managing an organization's business
processes
Enabling technology is meaningless without the management disciplines and processes for exploiting
the technology
BPM involves managing the end-to-end work organizations perform to create value for their
customers
Performance of this work is essentially how organizations fulfill their mission
Vendors have created application suites which help enable organizations to better manage their business
processes
Tools to visually design and model business processes −Simulate and test business processes, automate,
control and measure business processes −Provide feedback and reporting on process performance
Some vendors have combined these into integrated business process management suites Most large
organizations have a significant investment into a number of legacy systems Designed to support specific
functions
In order to manage the end-to-end work involved in business processes, a BPMS must be able to integrate
with legacy systems in order to control work, get information or measure performance
Common framework for how these technologies are deployed is most often referred to as a Service Oriented
Architecture (SOA)
Standardizing on a specific set of open technologies commonly referred to as web services −By leveraging
web services in a SOA, organizations can build and manage end-to-end business processes across
organizational silos and their legacy systems
Process Planning and Strategy
BPM lifecycle begins with developing a process driven strategy and plan for the organization
Sets the strategy and direction for the BPM process
Plan starts with an understanding of organizational strategies and goals
Designed to ensure a compelling value proposition for customers
Plan provides structure and direction for continued customer centric process management
Provides a foundation for a holistic BPM approach to ensure the alignment with organizational
strategy and the integration of strategy, people, processes and systems across functional boundaries
Identifies appropriate BPM organizational roles and responsibilities, executive sponsorship, goals and
expected performances measures and methodologies
Process Owner

52
How to go about
BPM?

53
The BPM lifecycle Process
identification

Process
Process architecture
architecture

Conformance
Conformance and
and Process As-is
As-is process
process
performance
performance insights
insights discovery model
model

Process
monitoring and Process
controlling analysis

Executable
Executable Insights
Insights on
on
process
process weaknesses
weaknesses and
and
model
model their
their impact
impact

Process Process
implementation To-be
To-be process
process redesign
model
model

54
Process identification steps
1. Designation step
◦ Enumerate main processes Process
◦ Determine process scope Architecture

2. Prioritization step (aka Process selection)

Prioritize processes based on:
◦ Importance Prioritized
Process
◦ Health
Portfolio
◦ Feasibility

After Davenport (1993)

 Wholesaler
Example: process architecture
Strategic
Management

Logistics Suppliers
Management Management

Warehouse Demand
Management Management
Management processes

Direct
Sales Distribution
procurement

Marketing Service
Core processes

Indirect
Finance IT HR
procurement
Support processes
 Prioritization
1.Importance (aka Process Selection)
Which processes have greatest impact on the organization‘s strategic objectives?
2. Health (or Dysfunction)
Which processes are in deepest trouble?
3. Feasibility
Which processes are most susceptible to successful process management?

Prioritized process portfolio

Hammer, Champy (1993)

Example: prioritized process portfolio
Financial institution

Hig
Short-term
Feasibility
h action
Loan Ratin
g Low
controllin Contract
g preparatio Medium
Loan n
decisio Loan High
Importance

n market
evaluation
Handling
of Loan
payments plannin
Loan g
Lo applicatio
w Poo n Healt Goo
r
Possibl h Strategic d

e fit?
The BPM lifecycle Process
identification

Process
Process architecture
architecture

Conformance
Conformance and
and Process As-is
As-is process
process
performance
performance insights
insights discovery model
model

Process
monitoring and Process
controlling analysis

Executable
Executable Insights
Insights on
on
process
process weaknesses
weaknesses and
and
model
model their
their impact
impact

Process Process
implementation To-be
To-be process
process redesign
model
model

59
 Business process model
Invoice handling

Finance ERP Invoice Report Invoice

Department
Enter Check
no
Invoice Invoice Post Invoice
mismatches
Invoice Details Mismatches
Invoice
received posted

Invoice DB Invoice
Senior Finance Officer
mismatch Block
exists Invoice
Invoice
blocked

60
The BPM lifecycle Process
identification

Process
Process architecture
architecture

Conformance
Conformance and
and Process As-is
As-is process
process
performance
performance insights
insights discovery model
model

Process
monitoring and Process
controlling analysis

Executable
Executable Insights
Insights on
on
process
process weaknesses
weaknesses and
and
model
model their
their impact
impact

Process Process
implementation To-be
To-be process
process redesign
model
model

61
Qualitative process analysis
Root-cause analysis example

62
Quantitative process analysis
Process simulation

63
The BPM lifecycle Process
identification

Process
Process architecture
architecture

Conformance
Conformance and
and Process As-is
As-is process
process
performance
performance insights
insights discovery model
model

Process
monitoring and Process
controlling analysis

Executable
Executable Insights
Insights on
on
process
process weaknesses
weaknesses and
and
model
model their
their impact
impact

Process Process
implementation To-be
To-be process
process redesign
model
model

64
Process redesign
AS-IS process model TO-BE process model

Cost

Time
Flexibility

Quality 65
The Process Redesign Orbit
The BPM lifecycle Process
identification

Process
Process architecture
architecture

Conformance
Conformance and
and Process As-is
As-is process
process
performance
performance insights
insights discovery model
model

Process
monitoring and Process
controlling analysis

Executable
Executable Insights
Insights on
on
process
process weaknesses
weaknesses and
and
model
model their
their impact
impact

Process Process
implementation To-be
To-be process
process redesign
model
model

67
Process implementation
Process
Process
change
automation
management

Executable
process Job redesign
design

IT
development & Training
configuration

Performance
Testing management
plan

... ….
68
The BPM lifecycle Process
identification

Process
Process architecture
architecture

Conformance
Conformance and
and Process As-is
As-is process
process
performance
performance insights
insights discovery model
model

Process
monitoring and Process
controlling analysis

Executable
Executable Insights
Insights on
on
process
process weaknesses
weaknesses and
and
model
model their
their impact
impact

Process Process
implementation To-be
To-be process
process redesign
model
model

69
Process monitoring Dashboards, alerts & reports

Event Model-based analytics (p. mining)

stream
DB logs

70
Course structure

Process
Week 3
identification

Process Weeks 2 & 4

discovery

Process Weeks 5-7

Weeks 12-14 Strateg Gover- Process
monitoring and
controlling y nance analysis

Culture

Weeks 10-11 Process Process Weeks 8-9

implementation redesign

72