MTAT.03.

231
Business Process Management (BPM)

Lecture 1: Introduction

Marlon Dumas

marlon.dumas ät ut . ee
 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 business
processes
– Data mining
• Mining business process execution logs
– Software Economics
• Business case analysis: Benefit assessment of IT projects

2
 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 Practice coordinator: Fabrizio Maggi
– 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
3
 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)

4
 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

5
Introduction to Business Process
Management

Marlon Dumas
What is a (Business) Process?

7
 “My washing machine won’t work!”

Warranty?
Call Centre
Technician

Customer Customer
Parts
Service Store
Dispatch

VALUE
fault-report-to-resolution process

© Michael Rosemann 8
 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)

9
What is a Business Process: Recap

10
 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.

11
 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 an
inefficient operation will magnify the inefficiency.”

12
 Why BPM?

Information Yields
Technology Business
Value

Enables
Yields
Process
Change

Index Group (1982)

13
How to engage in BPM?

14
 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

15
 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 to
automate 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 and
computer-literate employees at Ford.
d) None of the above

16
 The correct answer is …
Mazda’s Accounts Payable Department

17
How the process worked? (“as is”)

18
How the process worked? (“as is”)

19
How the process worked? (“as is”)

20
How the process worked? (“as is”)

21
How the process worked? (“as is”)

22
How the process worked? (“as is”)

23
Reengineering Process (“to be”)

24
Reengineering Process (“to be”)

25
Reengineering Process (“to be”)

26
Reengineering Process (“to be”)

27
Reengineering Process (“to be”)

28
Reengineering Process (“to be”)

29
 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 don’t need to do?

Automate things that need to be done.

30
 How to engage in BPM?

1. Process identification Process

Modeling
and opportunity assessment Tools
2. Process discovery (as-is)
3. Process analysis
4. Process re-design (to-be) Process
5. Process implementation Management
Systems
6. Process monitoring/controlling

31
 Process Identification

Core processes
Support processes
Management processes

Quote handling
Product delivery
Invoice handling

Detailed quote
handling process

32
Phase 1: Performance Measure
Identification and Selection

33
Phase 2: Process Discovery

34
Phase 3: Analysis

35
 Issue Register
Issue Short Issue Explanation Broad Consequence Assumptions Impact
No. Description

2 Information Units in Relocation Wrongly calculated 5% of cases go to the wrong 28,000x0.05x1

regarding system do not match entitlements cause queue, 5 minutes to sort 5 = 21,000
units does information provided manual calculation... queue and redirect. minutes
not match by ... 5% recalculating on average 350 hours/7.5
10 minutes per calculation. 47 hrs
9.5 working
days
5 Protected/ Not all fields in data Resource intensive, 5% of cases taking 2 28,000x0.05x3
Mandatory entry forms are relevant incorrect data. Cases in minutes to locate and close. 2=
data entry but mandatory. So Clarify need to 5% of relocations requiring 44,800
fields "fuzzy" information is physically be closed. entry that is not needed minutes
entered taking 30 minutes each. 477 hours/7.5
99.5 hrs
20 working
days
11 Information Time consuming to sort MBR does not get Info Only 1/3 rd of postings and 84,000x3.5 =
on through posting orders pack therefore cannot CIPC’s are entitled to 294,000
posting to identify relocations.... process move. More relocation. 28000 relocations min/60/7.5 =
orders information could be then sorting through 84000 653 days /250
provided which could postings. 3 to 4 minutes on working days
be used later in process average to sort through in year.
... each. 2.61 FTE

36
© Michael Rosemann
 Simulation / What-If Analysis
10 applications per hour
Poisson arrival process (negative
exponential)
0.3
Receive info Request info
No
0.5
accept Deliver card
Notify acceptance
Check for Yes Perform checks Make decision
completeness
Start 0.7
complete? Decide
0.8 End
reject
0.5 Notify rejection Time out
review request

Receive review
reviiew
0.2
request

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
… … … …

37
 Simulation output: KPIs

Resource Utilization
Resource Cost

100.00%
4,500.00 $ 4,260.95
90.00%
4,000.00
80.00%
3,500.00
70.00%
3,000.00
60.00% Cycle Time - Histogram
2,500.00 50.34%
50.00%
12
2,000.00
40.00%
10
1,500.00
30.00%
$ 898.458
18.82%
1,000.00
20.00%
# PI's

500.00
10.00%
6 $5.04%
285.00

0.00
0.00% 4
Clerk
Clerk Manager
Manager System
System
2

0
0 10 20 30 40 50 60

Days

38
 Phase 4: Process Re-Design

Costs

Time
Flexibility

Quality

39
Phases 5-6. When technology Kicks in..

40
 Process Execution Engines

• BPMN-based • IBM BPM

– BizAgi • Microsoft
– Activiti – BizTalk
– Progress Savvion – Windows Workflow
• BPEL-based Foundation
– Oracle SOA Suite
– ActiveVOS BPM

41
 Next Week

Introduction to Process Modeling

42