Business Process Management (BPM)

1. Business Process Management (BPM) Discussion of Real Steps Toward Improving Processes to Strengthen Business and IT Collaboration SIM Workshop February 1, 2005 Prepared by: Graham Tasman

2. Agenda

3. Question… • Who in IT has faced either of the following scenarios? • IT has had a process improvement initiative thrust upon them by the business and didn’t have the means to respond effectively • IT has initiated improvements in business processes and has had difficulty in getting the business interested and engaged

4. Business Process Management (BPM) Overview • In today’s world, leading companies recognize that maintaining competitiveness in the marketplace requires effective management and control of key business processes. • BPM, as defined by Gartner: “is an umbrella term describing the methodologies, metrics, processes, and systems used to monitor and manage an enterprise’s business performance.”

5. Business Process Management (BPM) Overview • True BPM provides both a way to effectively manage how work gets done and a framework to drive continuous process improvement. • BPM as a Strategic Enabler: In order to sustain the benefits from Process Improvement initiatives, organizations are beginning to leverage best-in-class BPM capabilities including automation software to accurately and precisely control processes in an organization

6. Traditional Process Improvement vs. BPM • Process Improvement • Initiatives that improve an organization’s current baseline processes to a more efficient and effective future state through evolutionary (not revolutionary) change • Size & scope can run the gamut from small informal initiatives run by ad-hoc teams to large enterprise-wide initiatives managed by dedicated process excellence teams • BPM • Takes on a prominent role after process improvement has taken place – including ongoing monitoring and management of changed processes, measuring performance, and seeking continuous improvement • BPM may or may not involve business process automation (BPA) software

7. BPM Example • Situation: The “business customer” has asked IT to manage a project to streamline its procurement process and views the problem as a system issue and expects IT to deliver a system solution. Based on its past BPM initiative experience, and having done preliminary analysis of the business customer’s problem, IT has confirmed that the solution is really about changing processes and coming up with a better way for the business customer’s employees to do their work.

8. BPM Example • Solution: • The IT function deploys an internally developed pool of process management experts • The process team maps out current state (base line), identifies gaps & designs future state process flows • Process team calculates expected payback from operational savings of the future state process • Obtain Stakeholder buy-in to proposed changes • Catalog policy & procedure changes • Develop / modify the consequence system • Implement general purpose process automation software to coordinate process flows • Provide training • Roll-out • Implement performance tracking

9. BPM Example • Outcomes: • The business achieved desired levels of productivity increases without making a major system investment • IT created real, measurable value for the business • IT continues to be the go-to resource for enhancing business performance through better Business and IT Collaboration

10. How does BPM Create Value for IT and for the Business? • Facilitating better relationships • Businesses can gain better controlof their processes and reduce the burden on IT to deliver solutions • IT can become more efficient by leveraging the reuse of existing resources • IT can respond rapidly to deploy new business solutions • Businesses can adapt quickly to new opportunities and competitive threats, while IT can quickly change existing systems

11. How does BPM Create Value for IT and for the Business? • Improving IT’s Alignment and Ability to Respond, Adapt, and Drive Value Back to the business • Promotes greatervisibility into actual company performance • Reduces cycle times and processing costs • Improves efficiency within IT and the business • Enables processes and IT to adapt quickly to changing business conditions

12. Discussion Questions… • In your IT organizations, who sees BPM as an opportunity for IT to deliver higher-level customer satisfaction for the business and IT?Why? • Who of you sees the opportunity to better align with your business executives through BPM solutions? • How do you or would you approach BPM? • Does the business value this? What do you think the perceived value might be? • Can you measure the value or the benefits you create?

13. More Questions… • For those of you who do not utilize BPM, why not? • Do you think it is an important ITservice offering to provide? • What do you need to be doing in order to make this service available?

14. What are the factors for successful BPM? • Identify a businesschampion with the authority to effect change • Leverage past best-practices experience • Identify immediate / quick-hits • Limit reliance on major technology enhancements to achieve process improvements • Leverage best-in-class BPM toolsets for process automation • Leverage existing process templates • Begin with a Pilot Group • Be Exact in Specifying Elemental Process Designs (i.e., avoid broad process scope and high-level designs)

15. How to make BPM happen in your organization • Inventory existing IT skills and “Communicating with the Business” skills • Do a first pass mapping against available process improvement and BPM methodologies • Determine skill gaps • Develop resource strategy for closing gaps • Evaluate BPM workflow automation toolsets; select a best-in-class package consistent with the current IT architecture standards • Build a client service competency to penetrate the organization and proactively seek out BPM initiatives by “living with the client” • Engage in a BPM pilot and measure success in “small wins” • Expand into departmental solutions before taking on the enterprise • Develop a measurement and monitoring discipline for all BPM initiatives

16. What are the People, Change, and Organization Implications? • How do I identify the right people in my organization for this kind of work? • Skills assessment and identification of gaps is critical • Consider the IT people and the Business people • Is my company ready to embrace BPM? Do they understand it? How will the culture respond? • IT must be ready to communicate to, and educate the business on BPM • Does the business have faith that IT can execute? • Consider building a BPM capability around a larger IT Transformation initiative geared toward improved client service

17. Examples of Successful BPM Projects • National Tire Company • Problem: Controlling the Certification Process – current inefficiencies in new product approval process • Solution: BPM reengineering with process automation • Results: Accelerated time-to-market by reducing general specification change process approval times by 80% • A National Medical Center in Washington DC • Problem: Inefficient paper-based procurement process • Solution: Reengineering the process for efficiency and leveraging process automation • Results: Significant reduction in processing time for requisitions with flexibility for different approval schemes. Able to achieve results without major ERP initiative

18. Examples of Successful BPM Projects • A World-Leading Children’s Hospital • Problem: Ineffective physician credentialing process • Solution: Reengineer the process to create more individual accountability at each process stage • Results: Performance measurements and monitoring drive desired behaviors of accountability to significantly improve credentialing cycle times • GlaxoSmithKline • Presented by Chris Anstey

19. Implications of not doing BPM • Opportunity cost of not converting known challenges to business results (savings or revenue) • Not fully harnessing the value of IT as a Strategic Contributor to the business • Continued perception by the Business that IT can only provide technical value (versus business value) • “Same ‘ole, Same ‘ole” IT Agenda • Lack of Alignment with the Business

20. Examples of where BPM is emerging as mission critical • Regulatory compliance • SOX, HIPPA, Patriot Act • Sarbanes Oxley – what the future holds: Section 409: Real Time Disclosure.“Issuers must disclose information on material changes in the financial condition or operations of the issuer on a rapid and current basis.”

21. Guiding Principles for Successful BPM • Sponsorship - Identify a Business champion and an IT Champion with the authority to effect change and build broad sponsorship • Start Small - Start small and build wins; begin with a Pilot Group • Leverage Prior Successes - Leverage past best-practices experience • Quick-Hits - Identify immediate impact opportunities and low-hanging fruit • Process over Technology - Limit reliance on major technology enhancements to achieve process improvements • Enable Automation - Leverage best-in-class BPM toolset (including a graphical process designer, a runtime process execution engine, agility features for real-time updates and modifications, tools to manage and monitor processes, including rich reporting features) • Be Specific - Be Exact in Specifying Elemental Process Designs (i.e., avoid broad process scope and high-level designs) • Measure Success - Define metrics to monitor and determine measures of success • Manage Human Behavior - Don’t assume the control of a workflow solution will be the holy-grail: enlist behavior controls into the Human Capital consequence system

22. Business and IT Collaboration “BPM: IT’s Opportunity to Partner in Business Value Creation”