Business Process Management - From Market Consolidation to Process Innovation
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Transcript of Business Process Management - From Market Consolidation to Process Innovation
Business Process ManagementFrom Market Consolidation to Process InnovationMichael zur Muehlen, Ph.D.Center of Excellence in Business Process InnovationHowe School of Technology ManagementStevens Institute of TechnologyHoboken [email protected]
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Private university, founded 1870‣ 1800 undergraduate, 2600 graduate students‣ Located in Hoboken, NJ (across the Hudson from Manhattan)
Four Schools‣ Technology Management‣ Engineering‣ Systems and Enterprises‣ Arts & Sciences
Rankings:‣ Top 5 technology management program, on par with Stanford,
MIT, CMU, Babson (Optimize Magazine)‣ #1 for best distance learning program (Princeton Review)‣ Top 25 for most connected Campus (Sloan Foundation)
http://www.stevens.edu
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Offers MBA in Technology Management, Master of Science (IS, Telecom Mgmt, Mgmt, EMTM), Bachelor’s Degree (Business & Technology)Programs taught on campus and off-site in corporate locationsClients: ADP, Avaya, BASF, Bristol-Myers Squibb, Chubb, Citigroup, Deutsche Bank, J&J, Lockheed, Merrill Lynch, PaineWebber, Pearson, Prudential, PSE&G, UBS, UPS, Verizon and othersResearch centers with focus on‣ Process Management
‣ Project Management
‣ Product Innovation
http://howe.stevens.edu
What this Talk is AboutHow has the field of BPM evolved?
Rules + Processes: The Next Frontier
Standards: Who needs them and what do they offer?
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User Conceptions about BPM
AbstractRestrictiveIt’s not Excel
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Too Abstract
Process thinking requires a lateral view of the organization
Process thinking requires to generalize from the day-to-day business
Process thinking is expressed in (semi-) formal notation
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http://farm1.static.flickr.com/177/429319452_08923116cd_b.jpg
Too Restrictive
Try modeling the following:Manufacturing can start anytime after the payment from the customer has been received
An inventory check, a credit check, and a regulatory check have to be performed - in any order
After quotes from 3/4 of the eligible suppliers have been received, or after three days (whichever is earlier) a selection is made
Users tend to think in “If-Then” scenarios
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It’s not Excel
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Types of BPM Projects“Let’s model everything” (aka I just learned BPMN)
“Let’s try this out first” (aka I don’t trust BPM)
“SOA first, let’s figure BPM out later” (aka I love acronym soup)
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“Let’s model everything”Develop a Process Architecture for the enterprise
Maintain comprehensive process documentation
Motivation
Compliance Requirements
Developing Global Standards
Mergers and Acquisitions
“We like to model”
“Let’s model everything”Develop a Process Architecture for the enterprise
Maintain comprehensive process documentation
Motivation
Compliance Requirements
Developing Global Standards
Mergers and Acquisitions
“We like to model”
Top-Down Strategy
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Process Groupings
Business Activities
Core Processes
Business Process Flows
Detailed Process Flows
Level A
Level B
Level C
Level D
Level E
Level F
ObjectivesBusiness Activities
Delivery Units Products
Processes Systems
Scorecard
Sub Processes Roles System Functions
Operational Process Flows
Detailed Processes TransactionsDetailed Roles
Delivery Teams
Ownership ServicesProcess Groupings
Core processes
Strategic Process
Description
Tactical Process
Description
Operational Process
Description
Source: British Telecommunications plc 2006
Strategy
BPM Application
Top-Down Project
“Let’s try this out first”Chooses a pilot process to gain experience with BPM
Good: Choose high-value, low-medium risk business case
Example: Onboarding, Claims Processing
Bad: Choose no-value, no-risk business case
Example: Complaints handling, Expense reimbursement
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First Generation BPM CaseMidwestern Life and Health Insurance Company deployed a FileNet Image and Workflow system in underwriting in 1995 to
reduce elapsed time to issue policies
reduce costs
and empower the underwriting area to make changes in their workflow with minimal I/S involvement
The company achieved objectives 1 and 2 but the customer found it too hard to make changes and turned it over to IT.
IT relied on Visual Basic since this was the familiar tool to the IT staff and eventually the system became hard to change. (Hardening of the workflow arteries).
Paper
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Now: BPM as Industrialization
Input Channels
OrderManagement
Process
Job Types
Production ManagementTransparencyAutomation, but only if not
too complex / rareother regulatory requirementsno economies of scale
Phone
Fax
Trading
Acct. Mgmt.
Payments
Complaints
Search processes using‣technical and‣business criteria
Display shows ‣status‣start time‣end time‣instance data
Drill Down is possible
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Example: Back Office
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Example: Back Office
“SOA first, let’s figure it out later”Establish basic services, ESB
Try to identify processes that can leverage the services
Problem: Without processes there is no point of reference for services abstraction, granularity
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What are you really good at?
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From Core to Commodity
Treat the process as a serviceDefine a standard interfaceThink about creating value outside and at the front-end
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Learn from Outside
Usage-based Insurance applies Telecom Billing Techniques
Progressive: Autograph Prototype ‘99-’01
Norwich Union:
Free GPS
Rate depends on mileage driven
Precondition: Flexible billing process
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Underwriting On DemandText2Insure: Provide Travel and Car Insurance via SMS
Provides Quote within 60 seconds
Reply “BUY”
Call from agent within 10 min for payment details
Cover2go: Accidental Death Insurance
Fees taken from cell phone bill
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BPM Evolution
Products
StandardsAcademia
M & AStaffware TIBCO
FYI Global360
Proforma Metastorm
Filenet IBM
Carnot Sungard
...
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Tool FeaturesModeling
High-End
Implementation
Execution
Human-Centric
EAI-Centric
Simulation
Basic
Enhanced
Rules
BRE Call
Decision Tables
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From Simulation to Optimization
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Rules + Processes
Control Flow DecisionsAssignment DecisionsMonitoring of Policies and Exceptions
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Managing Change
Claims processing at major US Insurance company
12 Process Steps
>5,000 Business Rules
What do you think changes faster?
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How many rules exactly?>90 product types and their associated product rules
>700 data edit rules
>70 claim pending rules
>200 types of correspondence letters
>250 claim processing and payment approval authority rules
>70 claim quality review sampling rules
>1,000 special client claim handling rules
>2,000 federal/state regulatory rules
>850 accounting rules
>600 published claim processing guidelines
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Control Flow DecisionsUsing Business Rules Engine to make data-based decisions about the sequence of processing steps
From Workflow: Workflow-relevant data
From BRMS: Branching decision
Useful if multi-criteria decisions are needed
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Simpler Processes
30Loos (2007)
Multi-Step Decisions
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Decision RulesExample Applications
Customer Contact Scripts
Validation of data before processing
Complex decision scenarios
Mining of rule criteria from runtime data
Model process with high fidelity
Run process and record audit trail
Apply statistical analysis techniques to uncover correlation between process data and process path
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Assignment DecisionsUse BRMS to route work to the most qualified performer
From Workflow: Assignment-relevant Data
From BRMS: Identifier of qualified resource(s)
Useful if assignment decisions are made based on data of the workflow object
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Original System
Network
FileNetImage System
Workflow
1. Application is scanned into
FileNet.
2. Data is enteredInto Admin Systems.
3. Application is assignedto Underwriter during
indexing process.
4. Underwriting Begins
AdministrativeSystems
5. Workflow and associated route work through the business process based on the kind of policy.source: Royce (2007)
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Sample RuleIf channel equals agency,
and plan equals mortgage term or whole life, and region equals Midwest, and age is greater than 18 and less than or equal to 65,and face amount is more than $250,000 and less than $1,000,000,and policy is a conversion from existing policy
Then assign to Midwest Level 1 Underwriter Group.
No Channel Region Age Face Amount Conversion? Assignment
1 Agency Midwest 18<=65250,000
<=1,000,000 noMidwest Level 1 Underwriter Group
2 Brokerage East 18<=65 >=1,000,000 yesEast Level 2 Underwriter Group
3 Agency South 18<=65 <250,000 no Underwriter Assistant Group
source: Royce (2007)
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Rule Engine Driven Assignment
Network
FileNetImage System
AdministrativeSystems
Workflow,Rule Engine and Robot
1. Application is scanned into
FileNet.
2. Data is entered into Admin Systems and used by Rule Engine.
3. Applications are distributed based on availability and skill level
and Admin Systems Are Updated.
4. Underwriting Begins
Assignment Engine
source: Royce (2007)
Cross-Process PoliciesUse BRMS to coordinate across process instances
Example: During labor action, hold all non-critical orders
Requires API for process control at the BPMS level
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Actions & Alerts
ProcessMetrics
GoalsThresholds
Risk Mitigation
KPI Evaluation
Action Schedule
Web Service Callor
Execute Script
Actions
Rules Engine
Email and Cellphone notification
Process Event
Triggers
38Shapiro (2007)
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Imaging System24/7 Issue System
Workflow and Rule Engine
App is Scanned and OCR’ed
Data EntryAnd Validation
Admin System
Rule Engine validatesApplication information
and Issues some policies
Underwriter reviews APS’s and some complex cases
Producer receives policy
for delivery.
Moving to Exception Based Underwriting
Auto Issue of Policies
Expanded Rules with Automatic Interface functionality may include:
Straight-through processingIntelligent requirement processingAutomated issueMinimized admin system entryWorkload Balancing
source: Royce (2007)
Standards?
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BusinessProcessManagement
BusinessProcessAutomation
BusinessProcessInnovation
BusinessProcessMonitoring
NotationStandard
Integration Standards
InteractionStandards
StandardMetrics
AuditStandards
The Workflow Reference ModelProcess
Definition Tools
Administration & Monitoring Tools
Interface 1
Interface 4 Interoperability
Interface 5Workflow Enactment Service Other Workflow
Enactment Service(s)
WorklistHandler
Interface 3Interface 2
InvokedApplications
Tool Agent
Process Definition Import/Export
ClientApps
WorkflowEngine(s) Workflow
Engine(s)
see: www.wfmc.org/standards/docs/tc003v11.pdf
TypicallyWeb Services
BPMN
XPDL
Wf-XML
SOAP
BPEL
Example: BPMN 1.0
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+ Pool, Lane, Grouping, Annotation, Transaction
Boundary...
BPMN 1.1
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Mainly cosmetic changes
New symbol for Multiple Event and Gateway (used to be star)
New Signal Event
Separation of “catching” and “throwing” events
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Practical Use of BPMN Symbols
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Source: Sample of 120 BPMN models
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Design Interchange vs. Executable Format
XPDLDesign Tool A
ExecutionEngine A
BPEL,XPDL,
or someengine
specific format
Design Tool B
ExecutionEngine B
BPEL,XPDL,or someengine specific format
XThis path not
generallysupported
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Process Design Ecosystem
Vend
or B
Vendor C
Design Tool
Design Tool
ModelingTools
OptimizationTools
SimulationTools
ExecutionEngine
ExecutionEngine
BPELor someengine
specific format
BPELor someengine specific format
Repository(XPDL)
Vendor A
Vendor D
ASAP
Wf-XML
Business Process Definition Metamodel (BPDM)
Designed to supplement BPMN with a formal metamodel of its modeling constructs
BPMN 1.0 did not contain a formal metamodel specification
OMG mindset of MDA is based on multiple levels of metamodels
BPDM replaces efforts to create a UML profile for BPMN
BPDM contains more constructs than BPMN 1.0/1.1
Mapping to MOF and XMI
Envisioned to become persistency format for BPMN
BPMN 2.0 = BPMN + BPDM + possibly other notations
There may be a UML profile for BPDM
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Universal Behavioral Happening
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FinishStart
End
Error
Universal Behavioral Happening
Behavioral ChangePart typed by the “Start” Change
Succession between Behavioral Change Part
Abort
The “Universal Behavioral Happening”
is in the M1 Library of BPDM
is the super type of all processes and choreographies
is the default type for all process steps and choreography steps
source: modeldriven.org
Processing Successions between steps can specify
The Behavioral Change that originated them
The Behavioral Change that they trigger
All combinations are then possible
End -> Start (the default)
Abort -> Start
Error -> Start
Start -> Start
Start -> Abort
…
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Behavioral Step 1 Behavioral Step 2predecessor successor
source: modeldriven.org
Example
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FinishStart
Abort
End
Error
Universal Behavioral Happening
Behavioral Step 1 Behavioral Step 2predecessor successor
behavioral happening type behavioral happening type
predecessor behavioral change part
successor behavioral change part
FinishStart
Abort
End
Error
Universal Behavioral Happening
source: modeldriven.org
SBVRSemantics of Business, Vocabulary and Rules
Formally defined taxonomy to describe elementary business operations and rules
Meta model expressed in UML
Business-level specification aims at enterprises to formally express their operations
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Example: SBVR Rules
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Users don’t care about standards per se, but about
their value proposition
Your Service Interfaces
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Your Business-level Services
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Your Process Interface
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Thank You – Questions?
Michael zur Muehlen, Ph.D.Center of Excellence in Business Process InnovationHowe School of Technology ManagementStevens Institute of TechnologyCastle Point on the HudsonHoboken, NJ 07030Phone: +1 (201) 216-8293Fax: +1 (201) 216-5385E-mail: [email protected]: http://www.cebpi.org
slides: www.slideshare.net/mzurmuehlen