Business process management

MTECH Consulting Services 2013

Business Process ManagementStephen AU

Mtech Engineering Co.,Ltd.


Process Dictate Result


The Organization as a System

Business Environment

Geopolitical Regulatory / Legal Economy Natural Environment Culture

ResourcesCapital Market

Labor Market

Suppliers

Technology Provider

Financial Stakeholders

Market

Management System

Competition Products / Services

Customers

Customer orders, requirements and feedback

Return

Investment

Products /Services

Capital

Human Resources

MaterialsEquipment

Technology


Man

agem

ent

The Value Machine

$

$

$ $

$

$ $

$

$ $

Resources

Working System


$$

Customers


Level 1 – Enterprise / Business

Business Environment

Geopolitical Regulatory / Legal Economy Natural Environment Culture

ResourcesCapital Market

Labor Market

Suppliers

Technology Provider


Management System

Market

Competition Products / Services

Customers

Customer orders, requirements and feedback

Management System

Value Creation System

Return

Investment

Products /Services

Capital

Human Resources

MaterialsEquipment

Technology


Level 2 – Value Chain System

Product / Service Designed

Product / Service Built

Product / Service Delivered

Product / Service


Level 3 / 4 / 5 Processing Sub-system

Built DeliveredDesigned

Product / Service Portfolio Managed


Product / Service

Production planning

Product / Service Produced & QC

Product / Service

Shipped & Invoiced

Product / Service Support

Open Project

Engineer Assigned

and Scheduled


Design Review

Engineer Assigned and Scheduled• Engineering Estimated•Resources Availability•Job Assigned and Scheduled•Detail Job Plan Developed

•Design spec reviewed•Required knowledge needed•Engineering hours estimated


Level 3 Processing Sub-System

Level 4 Process

Level 5 Sub-process / Task / Sub-task

Level 2 Value Creation System

Level 1 Enterprise / Business


Organization, System & ProcessFunctional units describe the flow of authority and responsibility. Processes are sets of activities undertaken by employees from functional units and managed by managers within functional units.Process describe the flow of workProcess thinking is just a subset of systems thinking.

System thinking puts the emphasis on understanding the organization as a whole. Process thinking stresses thinking about the portion of system that produces a specific set of results.


Comparison of Functional and Process Measure

Department or function

Typical departmental measures

Typical process measures

Sales department

Cost of salesRevenue ($)

Timely and accurate submission of ordersTimely and accurate entry of new ordersCost of processing orders

Production department

Cost of inventoryCost of laborCost of materialsCost of shipping

Timely order schedulingTimely and accurate production of ordersTimely shipment of ordersCost of unit production and shipping costs

Finance department

Percent of bad debtMean labor budget

Timely and accurate invoice preparationTimely and accurate credit checks for new

accountsCost of processing an invoice

External organizational measures

Gross revenueCost of salesGrowth of customer basePrice of stock

Percent of on-time deliveryPercent of rejectsCustomer satisfaction as measured on survey

or index


Business Process Terms

A collection of interrelated work tasks, initiated in response to an event, that achieves a specific result for the customer of the process.A process delivers a result to a customer.Importance:Result > Customer > Event > Work Tasks


…that achieves a specific result…

The result must be individually identifiable and countable.A good process name clearly indicates the result or end state of the process.


Information Process Maturity Model (IPMM)


Immature organizations

Significant differences in processReactionary and crisis-orientedQuality compromised to meet unrealistic budgets and schedulesDependent on individual effortUnpredictable quality in the product


Mature organizations

Organizational commitment to processRoles and responsibilities well definedSignificant management of the processQuality continually monitoredRealistic budgets and schedulesContinuous innovation to avoid bureaucracy


Levels of Process Maturity

Level 1: Ad HocLevel 2: RudimentaryLevel 3: Organized and RepeatableLevel 4: Managed and SustainableLevel 5: Optimizing


Level 0: Oblivious

Anyone can write; anyone can teachAccuracy is all we needNo one reads the manuals anywayThey’ll learn it on the job


Level 1: Ad Hoc

Writers and trainers manage their own workStyle standards are not enforcedStandard process is not followedTechnical experts are in control


Level 2: Rudimentary

Management in placeStyle standards begunProcess standards begunWhen the going gets rough, standards are abandoned


Level 3: Organized and Repeatable

Projects are managedStandards and processes are followedNew designs are introducedTime is available for improvement


Level 4: Managed and Sustainable

Processes are always followed and improved uponInnovation is closely linked to customer needsTime is available for qualityBureaucracy is defeated


Level 5: Optimizing

A continually improving organizationQuality measurements are in placeInnovations are part of the processEveryone is on the team

#1


Organizations with a mature mastery of their processes

The process is ad hoc. Few activities are explicitly defined and success depends on individual effort and heroics.

Organizations at this level routinely expect managers and employees to work together to improve process. They understand their processes well enough that they can conduct systematic experiments to determine if changes will be useful or not

Only a few organizations have an organization-wide understanding of how processes relate and have their corporate strategies and goals aligned, via the management hierarchy, to specific process activities

Most organizations are between levels 2 and 3. They have processes documented and standardized, but in many cases management’s goals are only loosely linked to process goals.

Continuous process improvement is enabled by quantitative feedback for the process and from piloting innovative new ideas and technologies.

Detail measure of the process and product quality are collected. Both the process and products are quantitatively understood and controlled

Basic project management processes are established to track cost, schedule, and functionality. The necessary discipline is in place to repeat earlier successes.

The process for both management and engineering is documented, standardized, and integrated by an organization methodology.

As organizations become more mature they begin to conceptualize business processes and seek to organize them, repeat successes, and measure results

Entrepreneurial organizations and new divisions do things any way they can to get started.

Organizations with an immature mastery of their processes

Figure 1.4 The five levels of SEl’s Capability Maturity Model (CMM)

1. Initial

5. Optimizing

4. Managed

3. Defined

2. Repeatable


Drivers of CMMManager monitor the quality of products and process that produce them.Schedules and budgets are based on historical performance and are realisticThe mature organization follows a disciplined process consistently because all the participants understand the value of doing so, and the necessary infrastructure exists to support the process.To structure processes and activities to guarantee that employees would function effectively.The only way to overcome those interdepartmental problems is to conceptualize and manage processes as wholes.When the ball is hit, every player reacts in a discipline manner.


Performance Framework

Goals and measures

Design and implementation Management

Organizational level

Organizational goals and measures of organizational success

Organizational design and implementation

Organizational management

Process levelProcess goals and measures of process success

Process design and implementation

Process management

Activity or performance level

Activity goals and measures of activity success

Activity design and implementation

Activity management


Levels of System / Process Analysis

Competition

Social and Regulatory Environment

Resources

Custom

ers and Market

Management

Engineering Production Finance Marketing Sales & Support

An Organization

Functions or Groups inside a Department

Level 1. The Organization and Its EnvironmentLevel 1 begins with a supersystem view that includes the external environment and then zeros in on the functions within the organization.

Level 2. Value Chains Process and SubprocessesLevel 2 begins with the value chains and core business processes and then zeros in on processes and subprocesses. The lowest level process we analyze is an activity.

Level 3. Activities and PerformanceLevel 3 begins with the activities and divides them into roles performed by employees, software components, and activities that combine people and software systems.

Activity

Subprocess

Value Chain or Core Business ProcessProcess


Function vs Process

Management

Engineering Production Finance Marketing Sales & Support

An Organization

Functions or Groups inside a Department

•Function•A Function is a kind of work, or a field, which typically involves similar skills and tools, and has its own languages.•Work method will be defined for the benefit of the individual function, not to optimize the manner in which work flows through the functions.

Leve

l 1

Leve

l 2

Leve

l N

Processes•Process•A collection of interrelated work tasks, initiated in response to an event, that achieves a specific result for the customer of the process.•A process delivers a result to a customer.•Importance: Result > Customer > Event > Work Tasks


Process / Workflow Management

Innovation Selection Detail Design

ConceptBusiness Cases Study

Mechanical Engineering

Market Information

Financial Information

Product performance Information

Proc

ess

Act

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Cha

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Bes

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Coo

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Sync

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Peop

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A Process Supported By Six Enablers

ProcessEnabler: workflow design

Enabler: information technology

Enabler: collaboration culture

Enabler: human resources

Enabler: policies & rules

Enabler: facilities and others

A. Sharp, P. Mcdermott (2000),”Workflow Modeling”, Atech House., pp.34, Fig.3.1.


Factors Affecting the Performance of an Activity

Activity ConsequencesInput Output

Feedback

2. Activity Support•Can the performer easily recognize the input requiring action?•Can the activity be done without interference from other activities?•Are adequate resources available for performance (time, tools, staff, information)?

1. Activity Standards•Do activity standard exist?•Does the performer know the desire output and standards?•Do performers consider the standard attainable?

3. Skill, Knowledge and Capability•Do the performers have the necessary skills and knowledge to perform?•Do the performers know why desired performance is important?•Are the performers physically, mentally, and emotionally able to perform?

4. Feedback•Do performers receive information about their performance•Is the information they receive

•Relevant?•Accurate?•Timely?•Specific?•Easy to understand?

5. Consequences•Are consequences aligned to support the desired performance?•Are consequences meaningful from the performer’s perspective?•Are consequences timely?

Figure 6.4 Factors affecting the performance of an activity. (Modified after Rummler and Brache, Improving Performance)


A Closer look at a Manager’s JobJob Functions of Manager Responsible for the Process

Plan ProcessSet goals and expectationsEstablish plans and budgetProvide resources and staffImplement process

PROCESS EXECUTED

Control ProcessMonitor processReinforce successDiagnose deviations Take necessary corrective actions

Changes in Goads and Plans

Goals/ Measures

Expectations, Plans, and Resources

Feedback Data about results

Process Output Measures

①

Inputs Results


Managing and Measuring Business Process (Example: Sales)

Organization Output

Department Output

Business process Outputs

Process Outputs

Subprocess Outputs

Task Outputs

Activity Outputs

Org

aniz

ati

onal

Lev

elW

hose

co

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n CEO

VP of sales

Sales ManagerSoftware systems designer

Human Resource

Mea

sure

s fo

r Sal

es Profits Sales Revenue

Customer Order

1. Leads qualified2. Appointment obtained3. Opportunities identified4. Proposal requested5. Proposal submitted

1. Information gathered2. Needs identified3. Decision makers identified4. Constraints identified5. Credibility established

1. Relevant data sources identified

2. Interviews scheduled3. Interviews conducted4. Conclusion reached and

recorded

1. Interview objectives established2. Questions asked3. Examples collected4. Points restated and qualified5. Interviewee reinforced for

talking6. State how interview was helpful7. Repeat how data will be used8. Interviewee thanked


Performance MatrixGoals and measures Design and implementation Management

Organizational goals and measures of organizational successHas the organization’s strategy / direction

been articulated and communicated?Does this strategy make sense, in terms

of the external threats and opportunities and the internal strengths and weaknesses?Given this strategy, have the required

outputs of the organization and the level of performance expected from each output been determined and communicated?

Organizational design and implementationAre all relevant departments and value chains

described in a process architecture?Are all departments and processes necessary?Is the current flow of inputs and outputs

between departments, value chains, and key processes appropriate?Does the formal organization structure

support the strategy and enhance the efficiency of the system?

Organizational managementHave appropriate department goals been

set?Is relevant performance measured?Are resources appropriately allocated?Are the interfaces between departments

being managed?

Process goals and measures of process successAre goals for key value chains, processes,

and subprocesses linked to each other and to customer / organization goals?

Process design and implementationAre value chains and business processes

decomposed into logical and efficient processes and subprocesses?Are these the most efficient and effective

value chain, process or subprocess for accomplishing the goals assigned?

Process managementHave appropriate process subgoals been

set?Is process performance managed?Are sufficient resources allocated to each

process?Are the interfaces between subprocesses

and activities being managed?

Activity goals and measures of activity successAre activity outputs and standards linked

to process requirement (Which are in turn linked to customer and organization requirements?)

Activity design and implementationAre activity requirements reflected in system

or job descriptions of people assigned to the activity?Are activity steps in a logical sequence? Have

superlative policies and procedures been developed?Is the activity environment ergonomically

sound?

Activity managementDo the performers understand the activity

outputs and standards they are expected to meet?Do performers have resources, clear signal,

priorities, and a logical job design?Do performers have the skill / knowledge t

meet goals ?Do performers know if they are meeting

goals?Are performers rewarded for achieving

activity goals?

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Activitydefinition

Store all descriptions in repository

Create diagrams on computer

Figure 17.1 Key features of business process modeling tools

Subprocesses can be defined for each process, etc.

Define, control & measure each process, activity, and relationship

Activity Description

Activity inputActivity outputEmployees involvedUnits per hourCost per hourDefect per hour

code:<<code, code<code>code:code code code code:Code:>>code:<<code, code<code>code:code code code code:Codes:>>

Code generation

A Professional BP Modeling Tool


•Can the process be effectively and efficiently performed?•Can the process be effectively managed? •Does the design of the process offer the potential for a competitive advantage?

MTECH Consulting Services 2013 36……

Where is the work space?

How does the work flow?

When is the deadline?

Question – Engineering Change Order

How can I know other opinion?

What is the actual happening?

What is the required task?

Start

End

What is the supporting document?

MTECH Consulting Services 2013IPD Lecture 3 -process

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Business process management

Leadership & Management

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