Prescriptions for business process management

IFN515 – Fundamentals of Business Process Management

WEEK ONE: Avalanche of aspects.

Professor Michael Rosemann.
Professor Michael Rosemann.

Notes on a 2004 white paper by Dr Michael Rosemann on the business process lifecycle.

Process identification criteria

Profit: difference between revenues and costs. Target cost intensive processes. Can often be customer-facing interfaces.

Problem processes identified by management based on processing time, number of IT applications, increasing customer complaints, dissatisfied employees, etc.

Likelihood of successful process revamp. Quickest, cheapest win.

Hammer and Champy (1994) mentioned:

Dysfunction: which processes are in the deepest trouble?

Importance: which processes have the greatest impact on customers?

Feasibility: which process redesign is most likely to succeed.

Davenport (1993), suggests the following steps –

  • Enumerate major processes.
  • Determine process boundaries.
  • Assess strategic relevance of each process.
  • Develop high-level evaluation of ‘health’ for each process.
  • Assess culture and politics affecting each process.

The Scoring Model lists all processes and assigns priorities to them, but might be too complex for most organisations.

Collaborative selection addresses organisational attitudes towards change, influence of other projects, line manager resistance.

As-is modelling

Need to develop common understanding and terminology to describe processes, and common techniques for documenting and accessing process documentation and plans.

Decisions to be made –

Who will design the models? Experts in modelling or amateurs? Murphy & Staples (1998) say selection is critical to chances for success.

Who will read the models? Small team of experienced business analysts or all employees? Conventions to be defined to suit audience.

What modelling technique will be used? [UML/BPMN/Signavio, etc.] Common software to be chosen.

A pilot can test re-design stages through unfreezing, change, and re-freezing.

Processes that include many interfaces are good candidates for simplification: customer complaints, purchase orders, sales orders, product development, and invoice verification.

Summary of the advantages as-is process modeling –

  • Common understandings and terminology.
  • Defined project scope.
  • Acceptance for the re-design project.
  • Pilot migration strategy for re-designed ‘to-be’ process.
  • Illustrates weaknesses and restrictions.

Summary of the disadvantages as-is process modeling –

  • Labour intensive and quickly obsolete.
  • Becoming beholden to existing constraints.

Business Process Frameworks

Complexity can be reduced by developing high-level ‘business process frameworks’, which describe the core business and support processes of a particular company.

[Probably appropriate to use existing architecture models, introduce that model, and/or fit into existing projects methodologies.]

Process analysis

Identifying pain points –

  • Goal of process?
  • Reason it is executed as is?
  • Which organisational units, systems are involved with what interfaces?
  • What are the current problems?
  • What other changes are anticipated in parallel?
  • Technology availability.
  • Current benchmarks for ‘best practice’ or ‘reference models’ [this is a danger point too, with consulting firms increasingly pushing their own documented models of previous work onto clients regardless of fit or suitability].

Reference models describe generic industry approaches, but sometimes also software functionality, as in SAP.

Best practice is state of the art’ or judged as superior to other methods. In practice this tends to be ‘better’ or ‘common’ practice.

Rosemann says that widespread use of the same ERP reference models does not mean losing competitive advantage. However, I think it does lead to progressively narrower and less competitive practices. Possibly it also encourages cartel collusions to eliminate competition and to rig markets.

Process improvement

Process improvement phase evaluates alternatives to as-is. It may require staff with business and project experience to examine three main areas –

  • Specific outcomes.
  • Process flow of activities.
  • Improved resource usage.

Outcome related improvements

  • Eliminate the entire process. Zero-based start: eg every report is eliminated until benefits are demonstrated.
  • Push system turned to pull system.
  • Pre-billing where delivery note and invoice are a single document.
  • Substitution of an outcome with a merger of processes.
  • Digitalization/automation of an outcome eliminates paper and double-handling.
  • Horizontal harmonisation of an outcome via standardisations across processes.
  • Vertical harmonisation by integrating parallel processes.
  • Separation of outcomes for clarity.
  • Consolidation of harmonisations for vertical economies of scale to reduce unit costs.
  • Process optimisation to reduce input costs [ Taylorism, automisation, JIT?].

Activity related improvements

  • Elimination of low-value activities, lean management, flatten management layers.
  • Pull to Push activities. Kanban flows information about process needs in opposite direction of process outputs. Eliminates bottleneck problems.
  • ‘Optimized Production Technology’ (OPT) ensures bottleneck is always busy to promote flow rather than capacity, making process batches variable, not fixed, with scheduling by constraints.
  • Automation of embedded activities through ERP systems, and process flow through a Workflow Management System (WFMS) to identify triggers, initiate activities, match data and applications, and human resources to job queues.
  • Parallel routing of activities by coordination at the joining points.

Resource related improvements

  • Integration of activities through ‘job enlargement’ to join tasks at same skill level, and ‘job enrichment’ to offer new challenges to an employee.
  • Optimal assignment of resources to ensure that skills match tasks.

Process implementation

  • Project kick-off meeting to facilitate cooperation and common understandings.
  • Training for new procedures.
  • Development or configuration of new software.
  • Tweaks and fixes for the to-be process model to be expected.

Process execution

  • First experiences to be consolidated for modifications.
  • Stabilization stage to freeze new process without becoming inflexible.
  • Project declared as finished.

Process monitoring and controlling

  • Performance data as prerequisite for fast adoption of business process to new requirements.
  • Controlling outcomes, activities, and resources [management by exception?].

Process change management

  • Continuous identification and evaluation of new competitors, changing demands, staff turnover.
  • Projects defined to implement t changes.
  • Change manager may be needed.

Sources cited

Davenport, T. H. (1993). Process Innovation: Reengineering Work Through Information Technology. Boston, Mass.: Harvard Business School Press.

Hammer, M., & Champy, J. (1994). Reengineering the Corporation: A Manifesto for Business revolution. New York: Harper Collins.

Murphy, F., & Staples, S. (1998). Reengineering in Australia: factors affecting success. Australasian Journal of Information Systems, 6(1), 59-69. Retrieved from http://journal.acs.org.au/index.php/ajis/article/view/318/285