KITTHE BPM KIT IS A COMPILATION

OF ARTICLES ON THE EVOLUTION,

USAGE, AND BENEFITS OF

BUSINESS PROCESS MANAGEMENT.

What is BPM? 2

The term BPM has evolved over time: from software tools that automate, integrate, and optimize processes to suite technology that delivers integrated process, knowledge, and analytics functionality to a manage-ment system that requires process-centric skills, activities, and tools.

Does BPM create value? 6

In the short term, BPM helps companies improve profitability by decreasing costs and increasing revenues. In the long run, BPM helps create competitive advantage by improving organizational agility.

Is BPM enough? 10

Many companies implementing BPM-based solutions are beginning to realize the limitations of traditional “pure-play” BPM products. Luckily, even as first-generation BPM reaches its limits, the BPM suite has emerged to address the shortcomings of pure-play BPM software.

Do you need BPM? 12

Want greater visibility into your processes? Unable to identify what’s causing bottlenecks? Find it difficult to pinpoint the assignment hand-offs in your processes? If your organization has any of these issues, BPM suites provide the logical solution.

Are perfect processes possible? 14

While the benefits of Six Sigma are clear, positive results are not always guaranteed. Successful implementation requires an investment in technol-ogy, and emerging BPM solutions are enabling Six Sigma organizations to instill a culture of constant process improvement.

Visit BPMbasics.com. Understand the basics. Explore the concept. Discover the benefits. BASICS

Originally defined as beats per minute, the acronym first became popular

among DJs during the disco era when beatmixing was common. While the original

connotation will continue to live on in dance music, BPM is now making a big

comeback in the technology era as business process management and quickly gaining

a strong following among IT and business users.

Why the rising popularity? More and more organizational leaders are realizing that business process management

creates significant competitive advantage. In fact, in a recent CIO Insight study, BPM was ranked #1 by IT

executives as the technology that will make the most significant contribution to carrying out their company’s

business strategy.1

Ask these executives to explain BPM, however, and the answers will vary across the board. That’s because over the

past few years, the term has evolved: from software to suite to system. At its core, it remains the means for aligning

IT and business, whether the ultimate objective is cutting costs, improving service, supporting growth, complying

with regulations, or achieving a combination of the above.

The softwareIn its simplest form, BPM is software that automates, executes, and monitors business

processes from beginning to end by connecting people to people, applications to

applications, and people to applications.

By doing this, BPM technology goes beyond its predecessors: workflow management

and enterprise application integration (EAI). While traditional workflow management

connected people by automating inefficient manual processes within a single

application, it was limited because it couldn’t connect applications without

extensive custom coding. EAI technology, on the other hand, connected these

applications by routing information between them so that data was automatically

synchronized throughout the organization. However, because it couldn’t automate

long-running or interactive processes (which required someone to take action or

make decisions), it failed to connect people.

Connecting people and applications, BPM software brought together – and

transcended – these two technologies. At a minimum, the typical pure-play BPM

application includes the following components:

BPM Originally defined as BPM Originally defined as Originally defined as . Originally defined as

1 Source: 2005 Future of IT Survey conducted by Ziff Davis Media and Equation Research, LLC.2005 Future of IT Survey conducted by Ziff Davis Media and Equation Research, LLC.2005 Future of IT Survey

A process is simply a set of

activities and transactions that

an organization conducts on a

regular basis in order to achieve its

objectives. It can be simple (i.e. order

fulfillment) or complex (i.e. new

product development), short-running

(i.e. employee on-boarding) or long-

running (i.e. regulatory compliance),

function-specific (i.e. proposal

management) or industry-specific

(i.e. energy procurement). It can

exist within a single department

(i.e. billing), run throughout the entire

enterprise (i.e. strategic sourcing), or

extend across the whole value chain

(i.e. supply chain management).

What is BPM?In music, it’s how beats are measured; in business, it’s how organizations are transformed

2 3KIT KIT

Process Designer — allows a trained user to analyze and model a process step by

step, as well as assign logic to it

Process Engine — executes the actual process flow, assigning manual activities to

people and automated activities to applications as the process unfolds

Rules Engine — manages the flow of information and activities within a process

according to the formulas and rules assigned to it

Process Analytics — provide continual feedback on the process itself so that

improvements can be made in the future

This set of tools allows an organization to actively manage its processes from

beginning to end, improving them along the way. But despite this extensive

functionality, pure-play BPM software has actually turned out to be somewhat limited and tactical in nature. Although it works

well for simple, transactional processes within departments, BPM doesn’t provide the functionality or infrastructure needed to

support complex, collaborative processes that extend throughout the enterprise as well as across the value chain.

The suiteTo address the shortcomings of pure-play software, the BPM suite

has emerged to deliver a variety of process, knowledge, and analytics

technologies in a unified package, enabling organizations to quickly

and efficiently build composite process applications. A more

comprehensive approach to BPM, it provides all of the Process

Management capabilities of BPM software discussed above, plus

the following functionality:

Document Management — provides a system for storing

and securing electronic documents, images, and other files

Collaborative Tools — remove intra- and inter-

departmental communication barriers through discussion

forums, dynamic workspaces, and message boards

Business Analytics — enable managers to identify

business issues, trends, and opportunities with reports and

dashboards and react accordingly

Portal — gives users a productive, flexible workspace for

managing tasks, content, forms, documents, notifications,

and reminders

Applications built with BPM suites are also user-friendly

(minimizing user training while maximizing user acceptance),

personalized (delivering secure, unique content to each user),

scalable (expanding to meet the needs of the department, the

A composite process application is an enterprise

application that is developed and deployed using a BPM

suite platform to solve a particular business problem, such

as complying with regulatory standards or managing a

company’s assets. By integrating existing applications,

pulling relevant data, and connecting appropriate people,

it overcomes the limitations of traditional enterprise

applications, offering more flexibility and scalability

as well as better collaboration and integration.

BPM Software

BPM Suite

What is BPM?

2 3KIT KIT

enterprise, or the value chain), and web-based (making them accessible to users anytime, anyplace). By leveraging information,

they allow users to make better business decisions and achieve better business outcomes. These applications don’t just manage

business processes; they solve business problems.

The systemGartner recently broadened the definition of BPM, recasting it as “a management practice that provides for governance of a

business’s process environment toward the goal of improving agility and operational performance.”2 This more holistic view offers

a structured approach for optimizing processes and takes into account the software tools discussed above as well as an

organization’s methods, policies, metrics, and management practices.

According to Gartner, BPM is about becoming a process-managed organization, which requires the following disciplines

(in addition to Information Technology):

Expertise & Experience — focus on

process-centric skills, training, education,

certification, research, business acumen,

and intellectual capital

Organizational Disciplines —

adoption of new or improved culture,

structure, roles, responsibilities,

policies, rules, incentives,

and procedures

Management & Control

Activities — improvement

of processes by defining,

modeling, simulating,

deploying, executing, monitoring,

analyzing, and optimizing

Partnerships & Services — reliance

on partners to provide services such

as consulting, implementation, and

business process outsourcing

Because this approach to BPM allows

organizations to abstract business process from

technology infrastructure, it goes far beyond automating

business processes (software) or solving business problems (suite)

– it enables business to respond to changing consumer, market, and regulatory demands faster than competitors, thereby creating

competitive advantage.

BPM System

What is BPM ?

4 5KIT KIT

2 Gartner, Michael James Melenovsky, Jim Sinur, Janelle B. Hill, David W. McCoy, Business Process Management: Preparing for the Process-Managed Organization, June 2005.

Since its resurgence in the 1990s, the term BPM has evolved: from software tools that automate, integrate, and optimize processes

to suite technology that delivers integrated process, knowledge, and analytics functionality to a management system that requires

process-centric skills, activities, and tools. Today, BPM is being widely used across all industries – a 2003 Delphi Group study

found that more than 75% of companies surveyed are currently using, implementing, or evaluating BPM technology.3 By

managing processes, integrating applications, and leveraging information, BPM is helping create value and competitive

advantage within organizations.

3 Delphi Group, Nathaniel Palmer, BPM 2003 Marketing Milestone Report, 2003.

What is BPM?

4 5KIT KIT

The blacksmith trade is in decline. Cartoon popularity is on the rise.

Acme Corporation may be in trouble. A large, established firm that specializes in the production and sale of manufacturing tools, Acme has experienced

a steady decline in revenue and profits over the past five years. The reason? Acme’s market is evolving, and the

organization is unable to respond to this change.

1 A composite process application is an enterprise application that is developed and deployed using a BPM suite platform to solve a particular business problem, such as complying with regulatory standards or managing a company’s assets. By integrating existing applications, pulling relevant data, and connecting appropriate people, it overcomes the limitations of traditional enterprise applications, offering more flexibility and scalability as well as better collaboration and integration.

Does BPM create value?By decreasing costs, increasing revenue, and improving agility, BPM suites provide a solid return on investment

6 7KIT KIT

FeaturesLeading BPM suites deliver a variety of process, knowledge, and analytics capabilities in a unified package (see Table 1). Process

management technology will allow Acme to streamline its operations by automating, executing, and monitoring business

processes from beginning to end. Knowledge management and collaborative tools will enable it to leverage information by

managing its documents and content and facilitating employee interaction in collaborative, knowledge-based communities.

Integrated analytics will help increase visibility by delivering extensive reports on key business operations and process

execution to managers.

Acme’s most popular product – the anvil – is being used less and less in metal-working and more and more as a standard prop

for animated cartoon gags. To make matters worse, as Acme’s market has changed, so has demand for its products. While its old

customer base preferred traditional anvils with tails and holes (to accommodate metalworking tools), its new customers want

anvils that come in differing shapes, sizes, and colors and have a horn at one end and flat face at the other (to combat pesky

roadrunners). Finally, new government regulations now require that all prop anvils have a certain amount of mass (so that they

are very hard to push around), but not much weight (so that a character can jump out of a plane with an anvil instead of a

parachute and not notice until he is airborne, of course!).

To remain profitable, Acme must learn to shift its customer focus, redesign its product base, and comply

with government regulations. Unfortunately, its processes are slow, manual, and paper-based. Its systems are

obsolete and stovepiped. And its employees are scattered in factories and offices around the globe.

In order to respond to these changing market, customer, and regulatory demands, Acme’s CIO decides to

invest in business process management (BPM) technology. Using a BPM suite, Acme will be able to quickly

and efficiently build composite process applications1 in order to address current (and future) business

challenges. As a result, Acme will be better equipped to adapt to business environment changes.

To understand how BPM will create value for Acme, let’s start by discussing the features, functionality,

and benefits of BPM suites (as they ultimately translate into value!).

6 7KIT KIT

Allows a trained user to analyze and model a business process, step by step, as well as assign logic to it

Executes the actual process flow, assigning manual activities to people and automated activities to applications as the process unfolds

Manages the flow of information and activities within a process according to the formulas and rules assigned to it

Allows users to share tasks, content, documents, and notifications through knowledge communities

Provides a system for storing and securing electronic documents, images, and other files

Remove intra- and inter-departmental communication barriers through discussion forums, dynamic workspaces, and message boards

Gives users a productive workspace for managing tasks, content, forms, documents, notifications, and reminders

Provide continual feedback on the process itself so that the improvements can be made in the future

Enable managers to identify business issues, trends, and opportunities with reports and dashboards and react accordingly

Process Designer

Process Engine

Rules Engine

Knowledge Management

Document Management

Collaborative Tools

Portal

Process Analytics

Business Analytics

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Using this comprehensive set of features, Acme can quickly and efficiently build composite process applications in order to solve

its business problems. Thus, Acme’s marketing department can use BPM technology to track strategic campaigns (including event

planning, public relations, and campaign management), R&D can use it to manage the entire product redesign process (from idea

inception to prototyping to product delivery), and corporate can use it to adapt to changing regulatory standards (achieving

compliance while solidifying corporate governance).

Because they’re built using BPM suites, these applications will be:

User-friendly — minimizing user training while maximizing user acceptance;

Personalized — delivering secure, unique content to each user;

Scalable — expanding to meet the needs of the department, the enterprise, or the value chain; and

Web-based — making them accessible to users anytime, anyplace.

FunctionalityBy integrating existing applications, pulling relevant data, and connecting appropriate people, composite process applications

built with BPM suites tend to overcome the limitations of traditional enterprise systems, ultimately enabling Acme to:

Streamline operations. A 100% HTML-based process modeler will let trained business users at Acme automate,

execute, and monitor business processes from beginning to end, eliminating redundancy and optimizing resources

along the way.

Integrate systems. By connecting existing applications (like CRM and ERP), these composite applications will route –

and automatically synchronize – information throughout the organization, freeing Acme employees from having to

manually change data in numerous applications while allowing Acme managers to call upon the most relevant content

when making decisions.

Share knowledge. Using a portal as a central access point, Acme employees will be able to control and reuse

vital corporate information, such as domain expertise, intellectual capital, and best practices. Users can identify

Does BPM create value?

TABLE 1

8 9KIT KIT

Does BPM create value ?

subject matter experts, share information in real time, and build public or private knowledge communities

when necessary.

Gain visibility. Through secure, web-based reporting dashboards, Acme managers will be able to monitor business

performance and analytical information in order to gain awareness of corporate operations, competitive activities, and

market dynamics, allowing them to not only identify business issues but also anticipate and correct problems before

they materialize.

Obtain feedback. With an extensive set of process performance reports, process designers can conduct detailed analysis

of successes and failures of specific processes to gain insight into future workflow design, thereby enabling Acme to

achieve a continuous, dynamic cycle of enterprise process improvement.

Create accountability. Via the portal, Acme managers can delegate work, track deadlines, automate escalations, and

monitor performance while enforcing personnel accountability for results through reports and audit trails.

Drive policy. Knowledge-centric tools help capture and manage enterprise data and best practices. A sophisticated rules

engine will ensure that policies, practices, and regulatory environments are clearly defined, centralized, automated, and

tracked so Acme can avoid the risks and costs associated with non-compliance or deviation from best practices.

Facilitate change. A sophisticated rules engine will allow Acme to adapt its processes dynamically as its business

environment continues to change while the ability to make in-flight process adjustments will permit managers to

modify processes and reallocate resources in real time.

BenefitsHaving developed and deployed composite process applications using a BPM suite, Acme is better equipped to respond to

business change. In the short term, BPM will help Acme improve profitability by decreasing costs and increasing revenues. In the

long run, BPM will help create competitive advantage for Acme by improving its organizational agility.

Decreased Costs

At first glance, BPM seems to deliver the same major benefit as traditional enterprise application technology like ERP: increased

workforce productivity (as a result of streamlining business operations and automating repetitive tasks). BPM suites, however, go

far beyond creating efficiency. Knowledge sharing capabilities and a collaborative portal help improve decision-making. Process

performance reports help optimize workflows. Notifications and triggers help reduce errors and eliminate waste. And an

intelligent rules engine helps enforce best practices. Thus, BPM suites not only help organizations increase workforce

productivity, but they also improve product quality and reduce corporate risk. The result? Within months of deployment, these

improvements will deliver substantial cost savings to Acme (see Figure 1B).

Increased Revenue

In addition to decreasing costs, BPM suites also help an organization raise its overall revenues by increasing product output,

accelerating cycle time, and improving customer service. Straight-through processing helps accelerate delivery times. Dashboards

help prioritize business activities by their influence on sales. Process performance reports help identify bottlenecks and reduce

hand-offs. Centralized enterprise knowledge helps speed decision-making. And closed-loop customer feedback processes help

track performance. Over time, these enhancements result in a faster time-to-market and an improved company image, which will

ultimately increase Acme’s sales and revenues (see Figure 1C).

Improved Agility

While decreased costs and increased revenue are the two most immediate and tangible benefits of business process management,

the real value BPM delivers is intangible. In the long run, composite process applications built with BPM suites help organizations

become more agile (see Figure 2). Intelligent rules ensure that processes adapt automatically to changes in the business

environment. Collaborative tools bridge department boundaries while improving and speeding decision-making. And in-flight

process modifications accelerate response to change by dynamically rerouting processes in real time. With these capabilities,

Acme will be better equipped to switch gears and respond to its changing business environment – faster than its competitors!

Thus, BPM will not only improve profitability, but it will actually help create competitive advantage for Acme. Faced with

decreasing revenues and increasing demands, Acme can use BPM suite technology to rapidly develop and deploy composite

process applications in order to solve the business problems it is currently facing. Within a few months of implementing BPM

technology, Acme will have reallocated its people to address emerging markets, redesigned its product to fulfill customers’ needs,

and refined its processes to meet government regulations. Having become a process-managed organization, Acme will be better

equipped to respond to changing market, customer, and regulatory demands. As a result, Acme won’t just be better positioned to

address its current business challenges; it will better prepared to take advantage of future business opportunities.

8 9KIT KIT

Does BPM create value?

Figure 1

(A) (C)(B)

Figure 2

Is BPM enough?Is BPM enough?BPM suites emerge to address the shortcomings of “pure-play” BPM

veryone knows the value of business

process management (BPM). The

benefits are clear – better business

performance, operational control, and

business agility. Used effectively, BPM

creates competitive advantage. That’s

why a recent Delphi Group study found

that more than 75% of companies

surveyed are using, implementing, or

evaluating BPM technology today.1

But as companies implement BPM-based

solutions, many are beginning to realize

the limitations of traditional “pure-play”

BPM products. These limitations become

painfully obvious when companies

look to leverage the value of BPM by

extending it across the enterprise.

The limitations of BPM pure-plays

BPM products are typically used by

organizations to build process-driven

business applications. These

applications are intended to bridge the

information gap between individuals

and enterprise systems, automating

business activities across departmental

boundaries and managing the flow of

information according to process rules.

The harsh reality, however, is that

building successful BPM-based

applications is often a struggle. The

reasons? First, traditional pure-play BPM

products do not provide a fully-

featured framework for business solution

development. No collaborative tools to

speed business processes. No knowledge-

centric tools to capture and manage

enterprise information. Weak

integration capabilities. Lackluster

security and identity management.

Primitive support for business analytics.

Second, pure-play BPM products were

designed for deployment with massive

customization to solve very tactical,

specialized business problems. Their

interface designs assume that all users

will undergo expensive training. The

failure of most BPM products to deliver

acceptable levels of usability prevents

these solutions from cost effectively

extending to support multiple business

activities across multiple departments.

Finally, pure-play BPM products struggle

with architectural limitations. Most

were designed a decade ago to support

small-scale, departmental applications.

In every case, they are partially tied to

last-generation, client-server architec-

tures. Many pure-play vendors only

support the Microsoft platform, which is

cost-effective for a standalone depart-

mental application but extremely

limiting in an enterprise environment

where a diverse IT infrastructure is

generally the rule.

The value of BPM suites

Luckily, even as first-generation BPM

reaches its limits, a new class of BPM

technology has emerged – the BPM suite.

Poised to take advantage of the full

promise of process management, BPM

suites deliver a comprehensive platform

E

Is BPM enough?

1 Delphi Group, Nathaniel Palmer, BPM 2003 Marketing Milestone Report, 2003.

10 11KIT KIT

10 11KIT KIT

of functionality. Unlike older pure-play

BPM products, suites have been designed

and architected from the ground up to

speed development of powerful process-

driven, context-sensitive business

applications.

In addition to powerful process manage-

ment capabilities, BPM suites include a

range of other integrated capabilities,

such as document management,

collaborative tools, knowledge

communities, business analytics,

personalization, and business activity

monitoring. BPM suites leverage flexible

portal frameworks that accelerate

application development and use

emerging standards like JSR 168, UDDI,

and WSRP to speed integration. Modular

and services-oriented, BPM suite

architectures are designed to facilitate

rapid application development.

The new generation of BPM suites is

designed for enterprise scalability. These

suites feature elegant, intuitive user

interfaces. They make business process

tools accessible to every enterprise user.

The best include 100% HTML-based

process designers that cost 10-20 times

less in terms of deployment, training,

and support versus older client-server

tools. And BPM suites are platform

independent, further reducing

deployment and integration costs.

The result? Process-driven business

applications that do more than just

automate and are easier to deploy.

Context-sensitive applications that

make people more effective by directly

delivering relevant information in the

right context as processes unfold, so

workers don’t have to waste time

tracking down information and

figuring out what to do. User-friendly

applications that deliver collaborative

tools to accelerate team-driven processes.

Intelligent applications that enhance

the ability of people and teams to make

better decisions as they work, resulting

not only in improved process performance

but also in better business outcomes.

In short, BPM suites allow organizations

to start tactically but think strategically.

Today, BPM may be needed to support

just a few critical processes. Tomorrow,

process management will be the glue

that brings employees and enterprise

systems together to function as a

coordinated whole. Tech savvy

companies should plan accordingly.

The search for the right BPM vendor

With more than fifty vendors competing

today, analysts predict that the BPM

market is poised for consolidation. Many

struggling pure-play vendors will not

survive the shake-up. At the same time,

many market entrants will lack the

business focus to deliver a functionally

complete product offering and may even

abandon the market if business condi-

tions change.

Even among the BPM suite vendors, not

all are created equal. Beware of BPM

suites that have been cobbled together

through acquisition or partnership.

They can easily become integration and

customization nightmares. Look out for

vendors that claim they offer a modern

suite but are tied to an old BPM engine

and client-server architecture developed

ten or fifteen years ago. Additionally,

platform vendors and EAI vendors who

are recent market entrants should be

viewed with skepticism. Their products

typically reflect a failure to understand

the unique challenges of orchestrating

complex human-to-human and human-

to-system business processes.

When considering BPM vendors, look

for companies with established size (at

least 150 employees and $20 million in

revenue), consistent growth, a profitable

business model (with no risky external

dependency on venture capital), a

functionally complete product suite,

and long-term commitment and

competency in BPM. Set the bar high –

unless your requirements are short term

and tactical, an excellent way to narrow

the field of potential vendors is to focus

on those that are capable of offering a

complete BPM suite.

Established size

Consistent growth

Profitable business model

Functionally complete product suite

Long-term commitment and competency in BPM

Narrowing the Field

When it comes to selecting BPM vendors look for companies with:

Is BPM enough?

1

2

3

4

5

6

7

Do you need BPM?o you need BPM?

BPM suites enable the orchestration of both human and system tasks in a single

process. This enables an organization to leverage existing legacy applications

in a service-oriented architecture (SOA). For example, the World Bank’s

BPM-powered procurement solution integrates third-party applications like

SAP and Lotus Notes into the sourcing process to delegate tasks to requisition,

appointment, and evaluation teams.

BPM suites provide intuitive reporting dashboards that combine business activity

monitoring (BAM) capabilities, user-defined Key Performance Indicators (KPIs),

and real-time and historical process data to deliver secure, quantitative feedback

to process owners.

BPM suites combine process model simulation, test-scenario tools, and robust

analytics capabilities to monitor processes throughout their entire life cycle,

from design to completion. For example, the U.S. Marine Corps implemented

Appian Enterprise and significantly reduced bottlenecks in their procurement

processes, resulting in real cost-savings of $9 million over 12 months.

BPM suites provide secure task management capabilities and process monitoring

tools that allow authorized users to identify who is responsible for what, how

long assignments have remained unfinished, and what process tasks lie ahead.

BPM suites automatically generate extensive process audit trails that capture

detailed information about what happened when. This audit trail is essential for

managing compliance-related processes, such as Sarbanes-Oxley and Six Sigma.

BPM suites encapsulate best practices and enforce management policies using a

built-in rules engine, ensuring that standard assignments are handled the same

way, every time. BPM suites also offer forms management tools, which help

standardize the interface through which employees complete assignments.

BPM suites enable in-flight process modifications so that managers can add new

work, reroute documents, and adapt underlying business rules to update processes

in real-time. Using in-flight process modification tools to enhance process agility

is one of the core goals of BPM suites and is quickly becoming a source of

sustainable competitive advantage for users.

If your organization has any of the following issues, BPM suites provide the logical solution

o you need BPM?

Do your processes involve various1 Do your processes involve various1 disparate, stove-piped IT systems in 1 disparate, stove-piped IT systems in 1addition to human tasks?

Do your managers complain about the2 Do your managers complain about the2 lack of visibility into their processes, 2 lack of visibility into their processes, 2initiatives, and projects? Is there a lack of

quantitative feedback?

Do you have trouble identifying who3 Do you have trouble identifying who3 or what is impeding your processes? 3 or what is impeding your processes? 3

Do you have process inefficiencies due 4 Do you have process inefficiencies due 4 to a lack of accountability and clear 4 to a lack of accountability and clear 4ownership of responsibilities?

After an organizational goal is reached,5 After an organizational goal is reached,5 do you have trouble looking back and 5 do you have trouble looking back and 5figuring out exactly who did what?

Are you worried about employees 6 Are you worried about employees 6 inconsistently completing assign-6 inconsistently completing assign-6ments throughout the organization?

Do you fear that your processes are 7 Do you fear that your processes are 7 not adapting to changing business 7 not adapting to changing business 7requirements because “this is the way

they have always been done”?

12 13KIT KIT

8

9

10

BPM suites allow users to clearly map out inter-departmental or inter-organizational

relationships, using both rules-based and group-based management tools. This

facilitates smoother workflow interaction and increases end-user accountability

across the extended enterprise.

BPM suites provide real-time analytics capabilities for assessing task completion

time, optionally aggregated by employee, team, or department. These metrics

enable managers to compare and group employee performance across processes,

time periods, and departments.

BPM suites ship with document and forms management capabilities so that

modeling processes involving the creation, modification, and approval of an

organization’s enterprise content is seamless and secure.

Do your processes cross departmental 8 Do your processes cross departmental 8 and organizational boundaries, 8 and organizational boundaries, 8making assignment hand-offs and

ownership responsibilities less clear?

Do you lack clear, measurable 9 Do you lack clear, measurable 9 metrics for gauging employee 9 metrics for gauging employee 9performance?

Do your processes frequently 10 Do your processes frequently 10 involve documents and forms as 10 involve documents and forms as 10well as other structured and unstructured

content?

Do you need BPM?

12 13KIT KIT

σSix Sigma organizations are using IT innovations to instill a culture of process improvement

The 18th letter of the Greek alphabet has come a long way since classical

times. Apply it to business processes today and it becomes a metric, a methodology,

a management system. In statistical terms, it measures how well a process performs and

represents the number of defects likely to occur per one million opportunities (see Table 1).1

Sigma.

1 A defect is defined as anything that fails to meet customer requirements.2 A process that is in statistical control will exhibit normal, random variation within natural limits.3 The other model used by Six Sigma organizations is the DMADV methodology (also referred to as DFSS): Define, Measure, Analyze, Design, Verify. DMAIC is used to make incremental

improvements to existing processes while DMADV comes into play when incremental improvements are not enough or new processes or products need to be developed.

To understand the concept of sigma,

consider the case of Cable Co., a cable

service provider that has received

quite a few angry calls from customers

lately because technicians have been

failing to arrive on time for service-

related calls. In an effort to increase

satisfaction (and retention), Cable Co.

decides to launch a new customer

initiative. The “On Time or It’s Free”

program promises customers that if

the technician does not arrive within

the scheduled three-hour window,

Cable Co. will give them a free month

of service.

What does this program mean in terms

of sigma? Let’s assume Cable Co’s

average cable package costs $50 per

month. If the company’s processes are

under control,2 and it performs approxi-

mately one million service calls a year, it

could have the following consequences:

At a two sigma level of performance,

Cable Co.’s technicians would arrive

on time for about 69% of calls, costing

the company as much as $15.5MM

per year in lost revenue alone.

At a three sigma level of performance,

Cable Co.’s technicians would arrive

on time approximately 93% of the

time, costing as much as $3.5MM per

year just in lost revenue.

At a four sigma level of performance,

Cable Co.’s technicians would arrive

on time more than 99% of the time.

While this sounds good in theory,

consider this: it may still cost the

company as much as $310,500 per

year in lost revenue.

As is evident by this example, a sigma

can make a big difference. Even what

may seem like a low percentage of

failures can actually have a major impact

on the bottom line.

Enter Six Sigma

Motorola, which was dealing with its

own quality issues during the 1980s,

pioneered Six Sigma (6σ), a quality

improvement program designed to

reduce process variations so that there

are no more than 3.4 defects per million

opportunities or activities. Since then,

Six Sigma has transcended statistics and

evolved into a management system that

ensures customer requirements are being

met on a consistent basis.

The model most often used by the Six

Sigma team to solve business problems is

the DMAIC methodology: Define,

Measure, Analyze, Improve, Control (see

Table 2 for further explanation).3

By using this structured, project-based

Table 1

69%

30.85370%

6.68070%

0.62100%

0.02330%

0.00034%

31%

69.1463%

93.3193%

99.3790%

99.976%

99.9997%

690,000

308,537

66,807

6,210

233

3.4

1,000,000

1,000,000

1,000,000

1,000,000

1,000,000

1,000,000

One

Two

Three

Four

Five

Six

Sigma Opportunities Defects (#) Defects (%) Reliability (%)

Are perfect processes possible?Are perfect processes possible?Are perfect processes possible?Are perfect processes possible?Are perfect processes possible?

14 15KIT KIT

approach, companies are able to

identify the real cause of a problem

and apply the most appropriate

solutions. In the case of Cable Co., for

example, a number of possible factors

could be causing technicians to arrive

late at customers’ homes: too many

calls scheduled during a three-hour

window, too much time being spent on

the road due to rush-hour traffic, or

too much distance between call

destinations.

Based on the information uncovered

during the process, Cable Co. can

react accordingly, ultimately improv-

ing quality while reducing costs.

Having achieved a Six Sigma level of

performance, Cable Co. can rest

assured that its technicians will arrive

outside the specified timeframe no

more than 3.4 times out of a million,

costing the company about $170 per

year in lost revenue as a result of the

“On Time or It’s Free” program, but

increasing customer satisfaction,

retention, and subscriptions.

Formula for Success

Of course, achieving 3.4 defects per one

million opportunities is no small feat,

and Six Sigma demands more than just

thinking in terms of quality. It requires

changing the way an organization

works. Listed below are the key success

factors for Six Sigma implementation.

Commitment from management Six Sigma will fail without a strong commitment from top management. Organizations must therefore motivate leaders to stay

involved, even after the initiative has been launched, by creating accountability for results and aligning incentives to performance. This

requires regularly conducting reviews, monitoring results, and tracking performance. Cable Co., for example, can ensure regional VP

support for Six Sigma initiatives by clearly defining key measures (i.e. number of late technician arrivals in each region), holding each VP

accountable for her region’s performance, and ultimately basing her bonus on Six Sigma involvement and success.

Selection and training of the workforce In addition to senior management sponsorship, successful Six Sigma implementation requires widespread company involvement.

Project leaders, often referred to as “Black Belts” or “Green Belts,” are chosen to execute Six Sigma processes, which are overseen by

“Master Black Belts.” The Six Sigma tool kit includes a variety of methods, techniques, and frameworks to help teams understand,

measure, and refine processes. For the initiative to be successful, organizations must clearly define roles and responsibilities and train

practitioners in everything from teamwork and communication to statistical tools and quantitative methods.

Focus on the customer Because Six Sigma is ultimately about meeting customer needs, often called CTQs (critical to quality), it should begin – and end –

with the customer. Most organizations are generally reactive and spend a great deal of their time solving customers’ problems. Six Sigma,

however, helps companies become proactive so they can anticipate problems and prevent them from occurring. This requires

understanding customer requirements and expectations and consistently meeting or exceeding them. In the Cable Co. example, an

influx of angry calls by customers pinpointed a key customer requirement: on-time arrival for service appointments. Further research

may uncover a number of other important requirements: product performance (i.e. reception quality), reliability (i.e. the number of

times customers lose reception during storms), customer service (i.e. level of satisfaction after a call), accuracy (i.e. how often customers

received an error on their bill), etc. Six Sigma provides the framework for understanding these requirements and developing processes for

meeting them on a consistent basis, ultimately increasing customer satisfaction and retention.

Investment in technology Often referred to as “management by fact,” Six Sigma is essentially a data-driven approach. It utilizes information and analysis to

develop and implement consistent, repeatable business processes which deliver value to customers. While Six Sigma provides the

framework for process improvement, business process management (BPM) suites provide the platform for achieving it. Through process

automation and simulation, knowledge and document management, and collaborative and analytical tools, BPM suites deliver the full

range of functionality needed to achieve Six Sigma (see Table 2). To ensure successful implementation, more and more organizations are

realizing the need to combine Six Sigma methodology with BPM technology.

Do you need BPM?

1

2

3

4

14 15KIT KIT

Define The project team is identified; a team

charter and project plan is developed;

customer requirements (CTQs) are

defined; a high-level process is

mapped.

Measure Metrics are defined; a data collection

plan is developed; the measurement

system is validated; data is collected;

baseline defect measures are

calculated.

Analyze Performance objectives are defined;

value and non-value added process

steps are identified; sources of

variation are determined; root cause(s)

of defects are pinpointed

Improve Potential solutions are developed and

tested; the final solution is refined and

implemented.

Control An ongoing monitoring and response

plan is developed, documented, and

implemented; improvements are

institutionalized; project responsi-

bilities are transferred to the process

owner.

Table 2

Six Sigma DMAIC Methodology BPM Suite Technology

Step Tasks Tools

Knowledge Management. Allows for rapid creation of a knowledge

community so Six Sigma team members can share tasks, content,

documents, and notifications.

Personalization. Delivers a personalized, task-oriented workspace to

each member of the team.

Collaborative Tools. Remove communication barriers between team

members and within the organization through discussion forums,

dynamic workspaces, and message boards.

Process Modeler. Provides an intuitive 100% HTML-based drag and

drop interface so team members can quickly create, share, edit, and

reuse processes.

Integration. Enables incorporation of enterprise data, documents,

web content, reports, and identities into the process.

Document Management. Allows the team to easily store, secure,

search, update, and track all Six Sigma project-related documentation.

Process Portal. Gives team members a productive workspace to manage

tasks, content, forms, documents, notifications, and reminders.

Analytics. Help the team identify business issues and inefficiencies

and take corrective action using performance metrics, status channels,

exception notifications, and process audit trails.

Dashboards. Feature secure, web-based reports for measuring process

performance.

Simulation. Helps team members identify where potential bottlenecks

and errors might occur with “what if” scenario modeling.

Process Engine. Supports high-volume transactional and long-running

production processes with speed and reliability and allows system

administrators to manage configuration and ongoing operational function.

Rules Engine. Ensures that policies, practices, and regulatory

environments are clearly defined, centralized, automated, and tracked.

Business Activity Monitoring (BAM). Enables monitoring of all

transactional behavior associated with the workflow.

Process Controller. Allows managers to achieve continuous process

improvement through round-trip engineering.

16 17KIT KIT

The Big Payoff

So does striving for near perfection

produce a major return on investment?

Thousands of companies around the

world think so. Since its inception in

the 1980s, Six Sigma has been adopted

by companies such as General Electric,

Johnson & Johnson, American Express,

Ford, and Bank of America. By reducing

cycle time, eliminating defects, and

improving customer satisfaction, Six

Sigma has been proven to lower costs

and increase profits.4

But while the benefits of Six Sigma are

clear, positive results are not always

guaranteed. Successful implementation

requires not only leadership commit-

ment, workforce training, and customer

focus but also an investment in

technology. Emerging business process

management technologies are enabling

Six Sigma organizations to instill a

culture of process improvement by

providing a framework for modeling

and executing business processes,

facilitating business interactions

between people, data, and enterprise

systems, and giving management

visibility and control over processes

through reports and dashboards.

4 GE, for example, estimated that Six Sigma saved the company more than $2B in three years.

Do you need BPM?

16 17KIT KIT

BPM Basics is the first online resource center designed to help IT and business users understand the evolution, usage, and benefits of business process management. Launched by Appian Corporation, the leading provider of BPM software suites, the site features three main sections:

BPM Content: explores what BPM is, how BPM creates value, and where BPM is being used.

BPM Tools: gives users access to a BPM glossary, various BPM tests, and the BPM expert.

BPM Resources: features links to BPM articles, reports, events, classes, and organizations.

For more information, visit www.bpmbasics.com or email info@bpmbasics.com.

BASICS

BPM Basics is brought to you by Appian Corporation, the leading provider of BPM software suites. Appian is the first BPM company to combine process, knowledge, and analytics capabilities in a comprehensive suite. Extending the value of existing systems, Appian’s award-winning software aligns business strategy and execution, delivering greater operational control over strategic business processes. Appian’s customers include Fortune 500 companies, government agencies, and non-governmental organizations. To learn more, visit www.appian.com, email info@appian.com, or call 703.442.8844.

18 13KIT KIT

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