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MTAT.03.231
Business Process Management (BPM)
Lecture 1: Introduction
Marlon Dumas
marlon.dumas t ut . ee
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About This Course
Objective: To introduce the principles and methods of Business
Process Management
The course relates to: Enterprise System Integration
Integrating applications to automate or support businessprocesses
Data mining Mining business process execution logs
Software Economics Business case analysis: Benefit assessment of IT projects
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Structure of the course
14 lectures covering: Principles of BPM
Process Modeling Using BPMN
Process Analysis (Qualitative and Quantitative)
Process Automation Process Monitoring and Mining
14 practice sessions
Intro to Process Modeling
Process Analysis & Re-design Process Automation using Business Process Management Systems
Process Monitoring and Mining (ProM)
Team Project with MBA Masters students
Practice coordinator: Fabrizio Maggi
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Grading
Seven homeworks worth 25 points in total List available in the course web page
Note: there is also a bonus task (extra points)
Project (25 points)to be released week of 15 April
Jointly with students from the Masters of ETM
Exam (50 points)
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Readings and Resources
Course material posted on course Web page
http://courses.cs.ut.ee/2013/bpm
Textbook
Dumas, La Rosa, Mendling & Reijers: Fundamentals of Business
Process Management, Springer 2013
Message board (for questions, discussion) http://www.quicktopic.com/50/H/RACpfMwnxRR
http://courses.cs.ut.ee/2013/bpmhttp://www.quicktopic.com/50/H/RACpfMwnxRRhttp://www.quicktopic.com/50/H/RACpfMwnxRRhttp://courses.cs.ut.ee/2013/bpm7/22/2019 It Lecture 1
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Introduction to Business ProcessManagement
Marlon Dumas
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What is a (Business) Process?
Collection of related events, activities anddecisions, that involve a number of actors andresources, and that collectively lead to an outcomethat is of value to an organization or its customers.
Examples:
Order-to-Cash
Procure-to-Pay Application-to-Approval
Claim-to-Settlement
Fault-to-Resolution (Issue-to-Resolution)
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fault - report- to-resolut ionprocess
My washing machine wont work!
VALUE
Customer
Warranty?
Parts
StoreService
Dispatch
Technician
Customer
Call Centre
Customer
Michael Rosemann
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Processes and Outcomes
Every process leads to one or several outcomes,positive or negative
Positive outcomes deliver value
Negative outcomes reduce value
Fault-to-resolution process Fault repaired without technician intervention
Fault repaired with minor technician intervention
Fault repaired and fully covered by warranty
Fault repaired and partly covered by warranty
Fault repaired but not covered by warranty
Fault not repaired (customer withdrew request)
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What is a Business Process: Recap
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BPM: What is it?
Body of principles, methods and tools to design,analyze, execute and monitor business processes
In this course, we will focus on BPM based on
process models.
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Why BPM?
The first rule of any technology used in a business
is that automation applied to an efficient operation
will magnify the efficiency.
The second is that automation applied to aninefficient operation will magnify the inefficiency.
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Why BPM?
InformationTechnology
Process
Change
Yields
Yields
BusinessValue
Index Group (1982)
Enables
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How to engage in BPM?
Continuous Process Improvement (CPI) Does not put into question the current process
structure
Seeks to identify issues and resolve themincrementally, one step at a time and one fix at a time
Business Process Re-Engineering (BPR)
Puts into question the fundamental assumptions and
principles of the existing process structure Aims to achieve breakthrough, for example by
removing costly tasks that do not directly add value
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The Ford Case Study (Hammer 1990)
Ford needed to review its procurement process to:
Do it cheaper (cut costs)
Do it faster (reduce turnaround times)
Do it better (reduce error rates)
Accounts payable in North America alone employed
> 500 people and turnaround times for processing
POs and invoices was in the order of weeks
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The Ford Case Study
Automation would bring some improvement
(20% improvement)
But Ford decided not to do it Why?
a) Because at the time, the technology needed toautomate the process was not yet available.
b) Because nobody at Ford knew how to develop the
technology needed to automate the process.
c) Because there were not enough computers andcomputer-literate employees at Ford.
d) None of the above
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The correct answer is
Mazdas Accounts Payable Department
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How the process worked? (as is)
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How the process worked? (as is)
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How the process worked? (as is)
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How the process worked? (as is)
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How the process worked? (as is)
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How the process worked? (as is)
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Reengineering Process (to be)
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Reengineering Process (to be)
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Reengineering Process (to be)
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Reengineering Process (to be)
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Reengineering Process (to be)
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Reengineering Process (to be)
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The result
75% reduction in head count
Material control is simpler and financial
information is more accurate
Purchase requisition is faster
Less overdue payments
Why automate something we dont need to do?Automate things that need to be done.
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How to engage in BPM?
1. Process identification
and opportunity assessment
2. Process discovery (as-is)3. Process analysis
4. Process re-design (to-be)
5. Process implementation
6. Process monitoring/controlling
Process
Modeling
Tools
Process
Management
Systems
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Process Identification
Core processes
Support processes
Management processes
Quote handling
Product delivery
Invoice handling
Detailed quotehandling process
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Phase 1: Performance Measure
Identification and Selection
Cost perexecution
Resourceutilization
Waste
Cost
Cycle time
Waitingtime
Non-value-addingtime
Time
Error rates
SLAviolations
Customerfeedback
Quality
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Phase 2: Process Discovery
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Phase 3: Analysis
Qualitative analysis
Root-cause analysis
PICK charts
Issue register
Quantitative Analysis
Flow analysis Queuing analysis
Process simulation
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Issue Register
Issue
No.
Short
Description
Issue Explanation Broad Consequence Assumptions Impact
2 Information
regarding
units does
not match
Units in Relocation
system do not match
information provided by
...
Wrongly calculated
entitlements cause
manual calculation...
5% of cases go to the wrong
queue, 5 minutes to sort
queue and redirect.
5% recalculating on average
10 minutes per calculation.
28,000x0.05x1
5 = 21,000
minutes
350 hours/7.5
47 hrs
9.5 working
days
5 Protected/Mandatory
data entry
fields
Not all fields in dataentry forms are relevant
but mandatory. So
"fuzzy" information is
entered
Resource intensive,incorrect data. Cases in
Clarify need to
physically be closed.
5% of cases taking 2minutes to locate and close.
5% of relocations requiring
entry that is not needed
taking 30 minutes each.
28,000x0.05x32 =
44,800
minutes
477 hours/7.5
99.5 hrs
20 working
days
11 Information
on
posting
orders
Time consuming to sort
through posting orders
to identify relocations....
MBR does not get Info
pack therefore cannot
process move. More
information could be
provided which could
be used later in process
...
Only 1/3rd of postings and
CIPCs are entitled to
relocation. 28000 relocations
then sorting through 84000
postings. 3 to 4 minutes on
average to sort through
each.
84,000x3.5 =
294,000
min/60/7.5 =
653 days /250
working days
in year.
2.61 FTE
Michael Rosemann
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Simulation / What-If Analysis
Start End
Check forcompleteness
Perform checks Make decision
Deliver card
Receive reviewrequest
Request infoReceive info
Notify acceptance
Notify rejection Time out
complete? Decide
review request
Yes
No
reject
reviiew
accept
10 applications per hour
Poisson arrival process (negative
exponential)
0.5
0.7
0.3
0.5
0.2
0.8
Task Role Execution Time(mean, dev.)
Receive application system 0 0
Check completeness Clerk 30 mins 10 mins
Perform checks Clerk 2 hours 1 hour
Request info system 1 min 0
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Simulation output: KPIs
Resource Utilization
18.82%
50.34%
5.04%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
100.00%
Clerk Manager System
Resource Cost
$ 898.45
$ 4,260.95
$ 285.00
0.00
500.00
1,000.00
1,500.00
2,000.00
2,500.00
3,000.00
3,500.00
4,000.00
4,500.00
Clerk Manager System
Cycle Time - Histogram
0
2
4
6
8
10
12
0 10 20 30 40 50 60
Days
#
PI's
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Costs
Quality
Time
Flexibility
Phase 4: Process Re-Design
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Phases 5-6. When technology Kicks in..
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Process Execution Engines
BPMN-based
BizAgi
Activiti
Progress Savvion BPEL-based
Oracle SOA Suite
ActiveVOS BPM
IBM BPM
Microsoft
BizTalk
Windows WorkflowFoundation
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Next Week
Introduction to Process Modeling
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