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BUSINESS PROCESS MANAGEMENT Business Process Management , a huge bestseller, has helped thousands o leaders and BPM practitioners successully implement BPM projects, enabling them to add measurable value to their organizations. he book’s runaway success can be attributed partly to its overview o all major useul rameworks (such as LEAN and Six Sigma) without over-investment in one over another, and a unique emphasis on BPM’s interrelationship with organizational management, culture and leadership—BPM is about people as much as processes . Its common-sense approach teaches how BPM must be well-integrated across an entire business i it’s to be successul: augmented and aligned with other management disciplines. his highly anticipated third edition brings Jeston and Nelis’ practicable rameworks solutions up-to-date with the latest developments in BPM, including the application oand the rameworks to value-driven BPM. his thoroughly revised and updated new edition includes: •
Enhanced pedagogy to help students learn and tutors use the book or their classes: now includes learning outcomes, chapter topics, learning objectives, highlighted key points, chapter summaries, critical discussion points and sel-test questions
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New and revised case studies throughout
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New chapters on questions that have become more crucial since the second edition’s publication: How should you start—top-down or bottom-up? Should we be customercentric?
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How does BPM link to today’ today’ss most most pertin pertinent ent mana manageme gement nt and and tech technolo nology gy issues issues?? What What are the critical success actors?
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Due to popular demand, a new and expanded section on I in BPM
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Brand new companion website including slides and assignment answers!
John Jeston has over 40 years’ experience in senior executive and consulting positions. He runs an international consultancy, Management By Process Pty Ltd. Johan Nelis works or Oakton, an Australian consulting and technology irm as Business Improvement Practice Manager. He was co-ounder and Vice V ice Chairman o the Dutch BPM Forum and Chairman o the Sydney Forum.
To our families
Yvonne, Brittany, Connor, Cassie and Kurt and Sandra, Angelique and Mystique Without the support and inspiration of our families this would not have been possible; we know it has been tough at times, your understanding will never be forgotten. Thank you. We will now endeavor to make up the time we have lost with you. John and Johan
BUSINESS PROCESS MANAGEMENT Practical guidelines to successful implementations Third edition J O H N J E S T O N A N D JO JO J OHAN NELIS
First published 2006 Second edition 2008 By Butterworth-Heinemann hird edition published 2014 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN and by Routledge 711 hird Avenue, New York, NY 10017 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2014 John Jeston and Johan Nelis he right o John Jeston and Johan Nelis to be identiied as authors o this work has been asserted by them in accordance with sections 77 and 78 o the Copyright, Designs and Patents Act 1988. All rights reserved. No part o this book may be reprinted or reproduced or utilized in any orm or by any electronic, mechanical, or other means, now known or hereater invented, including photocopying and recording, or in any inormation storage or retrieval system, without permission in writing rom the publishers. Trademark notice: notice: Product or corporate names may be trademarks or registered trademarks, and are used only or identiication and explanation without intent to inringe. British Library Cataloguing in Publication Data A catalogue record or this book is available rom the British Library Library of Congress Cataloging in Publication Data Jeston, John. Business process management/John Jeston and Johan Nelis. – hird edition. pages cm Includes bibliographical reerences and index. 1. Worklow – Management. 2. Reengineering (Management) 3. Business planning. 4. Industrial management. I. Nelis, Johan. II. itle. HD62.17J47 2013 658.5 33 – dc dc23 23 2013015403
ISBN: 978-0-415-64175-3 (hbk) ISBN: 978-0-415-64176-0 (pbk) ISBN: 978-0-203-08132-7 (ebk) ypeset in Minion Pro and Futura by Florence Production Ltd, Stoodleigh, Devon, UK
CONTENTS
List of figures List of tables Notes on contributors Foreword by Thomas H. Davenport Preface Introduction Introduction to the third edition
xii xvii xx xxiii xxvi xxviii xxxi
Acknowledgments Training services Positioning our books
xxxiii xxxiv xxxv
Part I FREQUENTLY ASKED QUESTIONS
1 What is business process management? 2 How can we demystify business process management?
1
3 10
Brief history of business process management 10 The next big thing (or how mystification begins) 12 BPM hype cycle 13 What is mystifying about BPM? 13 The Iceberg Syndrome 15 Exploring “reality” 16 Change management and performance management 18 Conclusion 21
3 Who sho shoul uld d be inv invol olved ved in BPM BPM an and d what what are th thee critical success factors?
23
Management of business processes 25 Use of external BPM experts 27
v
CONTENTS
Critical success factors 29 A metaphor for fo r BPM involvement 32
4 When When shou should ld you you do do BPM— BPM—wha whatt are are the the main main driv drivers ers and triggers?
35
5 How should we start BPM—bottom-up or top-down?
42
Bottom-up approach 43 Top-down approach 45
6 Why is is it impor importan tantt to impr improv ovee busin business ess pro proces cesses ses befo before re automating them?
49
What are the problems with automating first? 50 Why is this not working? 50 Why is this so? 51 Need to improve processes first 52 Key considerations 53 Conclusion 54
7 What are the technology components of BPM?
56
Modeling and design 58 Execution and tracking 60 Performance management 64 Technology standards 67
8 Should we be customer-centric?
70
9 Why is determining BPM Foundations a critical first step?
78
BPM Foundations 81 BPM Enablement 81 BPM Foundations and Enablement benefits 82
10 Why do you you nee need d a str struc uctu tured red ap appro proach ach to implementing BPM?
85
Typical common approach pitfalls 90
Part II BP B PM—HOW DO YOU DO IT? THE 7FE FRAMEWORK
95
11 7FE Framework overview
98
7FE Framework 103
vi
CONTENTS
7FE Framework phases 106 Project essentials 109 A process-focused organization 111 Addendum: 7FE Framework and Six Sigma, Lean and Lean Six Sigma 113
12 Guidelines on how to use the 7FE Framework
119
Why a “one approach fits all” all” philosophy does not work 120 How are BPM activities initiated? 120 Four scenarios in implementing BPM 125 How to determine which scenario is applicable 126 Skipping of a phase 127 Paralleling phases 128 Assignment 130
13 Foundations phase
133
Why? 134 Results 139 How? 139 Detailed steps 139 Foundations phase outputs 170 Foundations phase risks 171 Assignment 173 Foundations phase checklist 174
14 Enablement phase
176
Why? 177 Results 180 How? 180 Detailed steps 213 Enablement phase outputs 214 Enablement phase risks 215 Assignment 217 Enablement phase checklist 217
15 Launch pad phase
219
Why? 220 Results 221
vii
CONTENTS
How? 222 Detailed steps 222 Realize value 248 Launch pad phase outputs 248 Launch pad phase risks 249 Assignment 251 Launch pad phase checklist 251 Extra reading 252
16 Understand phase
264
Why? 265 Results 266 How? 267 Detailed steps 271 Realize value 291 Understand phase outputs 291 Understand phase risks 292 Assignment 294 Understand phase checklist 295 Extra reading 295
17 Innovate phase
301
Why? 302 Results 302 Key misunderstandings about innovation 303 How? 305 Detailed steps 311 Realize value 337 Innovate phase outputs 337 Innovate phase risks 339 Assignment 340 Innovate phase checklist 340 Extra reading 341
18 People phase Why? 355 Results 356
viii
354
CONTENTS
How? 357 Detailed steps 358 Realize value 378 People phase outputs 378 People phase risks 379 Assignment 381 People phase checklist 381
19 Develop phase
384
Why? 385 Results 388 How? 388 Detailed steps 389 Realize value 406 Develop phase outputs 407 Develop phase risks 408 Assignment 409 Develop phase checklist 409
20 Implement phase
412
Why? 412 Results 414 How? 414 Detailed steps 415 Realize value 426 Implement phase outputs 426 Implement phase risks 426 Assignment 429
21 Re Realize value phase
430
Why? 431 Results 433 How? 433 Detailed steps 434 Critical success factors 445 Realize value phase outputs 446 Realize value phase risks 446 Assignment 449
ix
CONTENTS
22 Sustainable performance phase
450
Why? 451 Results 453 How? 453 Detailed steps 453 Realize value 460 Sustainable performance phase outputs 461 Sustainable performance phase risks 461 Assignment 462 Sustainable performance phase checklist 462
23 Essentials introduction
466
Why? 466 How? 467 What are the three essentials? 468
24 Pr Project management
470
Why? 470 Results 475 How? 475 Project “gates” 475 Stakeholder management 481 Managing stakeholders for successful delivery 483 Continuous active project review 494 Project management risks 496 Assignment 497
25 People change management
49 8
Organizational culture 501 Process of people change management 505 Appreciative Inquiry approach 519 Assignment 525 Extra reading 525
26 Leadership Why? 533 How? 535
x
533
CONTENTS
leadership in the context of a BPM activity? 536 What is leadership Overview 547 Assignment 549
27 Embedding BPM in the organization
550
Why? 551 What are the elements of embedding BPM in the organization? 552 Ownership of processes 554 Organizational structure of embedding BPM 555 Ad-hoc BPM 557 Building BPM 560 BPM enabled 564 Extra reading 566
Part III CASE STUDIES AND BPM MATURITY
57 3
28 Case studies from the USA, Asia and Europe
575
Case study 1: USA 576 Case study 2: Asia 580 Case study 3: Europe 586
29 BP BPM maturity model
602
Introduction 602 Business process management maturity 603 The BPM maturity model 607 Application of the t he BPM maturity maturi ty model 616 Related work 617
30 Business process maturity models. What’s in a name?
61 9
Notes Glossary References and bibliography Index
633 637 641 647
xi
FIGURES
0. 1 1. 1 2. 1 2. 2 2. 3 3. 1 4. 1
xii
Management by Proccess Framework BPM House: components o a BPM program strategy How did BPM emerge? BPM hype cycle Perception, the tip o the iceberg called “reality” Regatta as a metaphor or implementing a BPM activity ypical BPM drivers
xxxv 7 11 13 16 33 40
5. 1 7. 1 7. 2 7. 3 8. 1 8. 2 8. 3 8. 4 8. 5 9. 1 10.1 10.2
BPM House BP B PM technology components Fictitious travel agency worklow Interactive dashboard example Customer-centric: voice o the customer Customer levels o service and satisaction Employee-centric: voice o the employee o be the best is a balance Employee motivation and satisaction BPM House: components o BPM raditional process project approach ABPMP BPM CBOK
44 57 59 66 71 72 73 74 76 79 86 87
10.3 11.1 11.2 11.3 11.4 11.5 11.6 11.7 12.1 12.2 12.3 13.1
Perormance components Organizational alignment BPM success stool Perceptions o BPM vary BPM Project Framework 7FE Framework BPM Program Framework BP Relationship o BPM project essentials BPM activity approaches and triggers Strategy led approach Scenarios or process improvement Foundations phase
®
88 99 101 102 104 105 107 111 121 122 126 134
13.2 13.3
Winchester House—why is a plan essential? Strategy execution void St
135 137
FIGURES 13.4 13.5 13.6 13.7 13.8 13.9 13.10
Fo F oundations phase steps Discovery meeting plan Di Enterprise level 1 process model template Enterprise level 1 process model Enterprise level 2 process model template Development o strategic themes Summary o strategic themes Su
140 143 144 145 145 146 146
13.11 13.12 13.13 13.14 13.15
147 148 150 151
13.16 13.17 13.18 13.19 13.20 13.21
Execution plan Planning to execution ac acccountin ingg or the reality o the organiz izaation Management by Process strategy execution void model he innovation “stack” Management eectiveness and operational eiciency are used to ill the strategy execution void Management eectiveness processes BPM House and strategy execution void BPM strategy execution void closed loop What is the organization’s core value proposition? Case study o an org rgaanizatio ion n’s perception o core value pro rop pos osiitio ion n Determine width o BPM activities
13.22 13.23 13.24 14.1 14.2 14.3 14.4 14.5 14.6 14.7 14.8 14.9
Components o a BPM target operating model Foundation phase outputs to other phases Assignment high level value chain Enablement phase Organizational alignment Components o a BPM target operating model Enablement phase steps En Functional organizational structure Functional organizational representation An end-to-end process perspective Process representation o Air Products Process representation o an insurance organization
167 170 174 177 178 181 181 183 183 184 185 185
14.10 Process level structure 14.11 Strategic and execution governance 14.12 Sample organizational process governance structure 14.13 Business capabilities delivered by processes 14.14 Gradual roll-out 14.15 Process asset components 14.16 Pr P rocess asset and change impact 14.17 Process Architecture, link between business and I 14.18 P Prrocess model inormation links 14.19 Ch Changing behavior and culture 14.20 Enablement phase outputs to other phases 15.1 Launch pad phase
188 190 191 196 198 202 202 203 203 211 213 220
15.2 15.3
221 223
BPM Launch pad L aunch pad phase steps La
153 153 154 155 157 158 161
xiii
FIGURES 15.4 15.5 15.6 15.7 15.8 15.9 15.1 15 .100
xiv
End-to-end process Determine redesign width Process Selection Matrix Process Selection Matrix—case study example raditional implementation Involve implementation rom the start o the project Bene Be nei its ts o St Stru ruct ctur ural al Im Impl plem emen enta tati tion on abo above ve r rad adit ition ional al Im Impl plem emen enta tati tion on
228 228 232 234 242 242 2433 24
15.11 Sample BPM activity team structure or a large-scale BPM project 15.12 Launch pad phase outputs to other phases 16.1 Understand phase 16.2 Understand phase steps Un 16.3 Sample Simpliied Costing Matrix 16.4 Alternate costing analysis 16.5 Critical to Quality tree 16.6 Sample Failure Mode Eect Analysis (FMEA) 16.7 P Peeople Capability Matrix 16.8 Knowledge and inormation needs map 16.9 Process Selection Matrix heat map using FMEA scores 16.10 Understand phase outputs to other phases
244 248 266 271 279 280 283 285 286 287 289 291
16.11 16.12 17.1 17.2 17.3 17.4 17.5 17.6 17.7 17.8 18.1 18.2
Voice o Customer or on-boarding o new students process(es) Voice o Customer or on-boarding o new students process issues Innovate phase An example o innovation Conventional organization structure ransaction processing Customer levels o service and satisaction Organization eort Innovate phase steps Innovate phase outputs to other phases People phase People phase steps
294 294 302 306 308 308 310 311 312 337 355 359
18.3 18.4 18.5 18.6 18.7 18.8 18.9 18.10 18.11 19.1 19.2 19.3
Activity, job and structure creation Perormance measures by phase Pyramid o perormance targets Sample throughput and service targets Process perormance report People Capability Matrix with Gaps Organization structure creation Sample Span o Control distribution chart People phase outputs to other phases Develop phase Business Process Management System Develop phase steps
361 364 367 368 370 371 372 374 378 385 387 388
19.4 19.5
BPM components o an automated solution Process and Service seem dierent
390 393
FIGURES 19.6 19.7 19.8 19.9 19.10 19.11 20. 1
Service is the result o the Process Visualization o Waterall and Agile development V-diagram: lilinking sp speciication, de development an and te testing o o so sotware raditional SDLC approach to development o a BPM solution Sample Burn Chart Develop phase outputs to other phases Implement phase
393 395 397 402 403 407 413
20. 2 20. 3 20. 4 21. 1 21. 2 21. 3 21. 4 21. 5 21. 6 21. 7 21. 8 22. 1
Implement phase steps Classiication o incidents during user acceptance testing Implement phase outputs to other phases Realize value phase Project cost/beneits payback period Beneits management context Realize value phase steps Scenario comparisons to baseline costing B eneit Milestone Matrix Be Beneits delivery matrix Realize value phase outputs to other phases Sustainable perormance phase
416 422 427 431 432 433 434 440 441 442 447 451
22. 2 22. 3 22. 4 23. 1 24. 1 24. 2 24. 3 24. 4 24. 5 24. 6 25. 1 25. 2
BPM House and the Sustainable perormance phase Sustainable perormance phase steps Sustainable perormance phase outputs to other phases Project phases and essentials he myth o project management methodology success Project management essential Stakeholder project impact and view analysis Stakeholder enthusiasm and interest analysis Basic conlict resolution model Continuous active project review People change management essential Beneits rom change management
452 454 460 467 471 472 589 589 592 594 500 501
25. 3 25. 4 25. 5 25. 6 25. 7 25. 8 25. 9 26. 1 26. 2 27. 1 27. 2 27. 3
Organizational culture People change management steps Adoption curve Unreeze–change–reeze method National trust: trust level by country Appreciative Inquiry 4-D model Forces or cultural change Leadership essential Leadership’s sphere o inluence Organizational embedding o BPM inluences success rate BPM House and embedding BPM within the organization Positioning o ormal BPM group
503 506 509 511 516 522 526 534 537 552 553 556
27. 4 28. 1
Mapping o unctional requirements required and provided Engineering and capacity management structure
571 590
xv
FIGURES 28.2 28.3 28.4 28.5 28.6
Industrialization toolset Process management training and simulation Phase 1: Evolution and status o industrialization in Central Service Center Capacity planning Phase 2: Evolution and status o industrialization in Central Service Center
28.7 28.8
Workrouting Phase 3: Evolution and status o industrialization in Central Service Center 28.9 Ac A ccurate processing data 28.10 Phase 4: Evolution and status o industrialization in Central Service Center 28.11 Fu F uture web-based process portal 28.12 Phase 5: Evolution and status o industrialization in Central Service Center 29.1 Comparison o low and high maturity and the ive maturity stages 29.2 he underlying model 29.3 he BPM capability areas 30.1 30.2 30.3 30.4
xvi
he conceptual ramework o business process capability areas o Van Looy et al. (2012), based on deinitions and theories Mapping the capability areas o de Bruin and Rosemann (2007) to the capability areas o Van Looy et al. (2012) A theoretical model or business process maturity he BPMM Smart-Selector
591 591 592 595 595 596 597 597 598 599 599 605 608 611 625 627 628 630
TABLES
1. 1 2. 1 3. 1 3. 2 3. 3 4. 1 5. 1
Deinition o terms used in our deinition o BPM Promotion v. reality BPM activities and the type o involvement BPM critical success actors Successul BPM organizations and who drove BPM Drivers and triggers that may cause an organization to consider BPM BPM activities and BPM approach
5 14 24 30 31 37 43
11.1 11.2 12.1 12 .1 12.2 13.1 13.2 13.3 13.4 13.5 13.6 13.7 13.8
Process-ocused versus non-process-ocused organization DMAIC and DMADV comparison with 7FE Framework Rela Re lati tion onsh ship ip be betw twee een n th thee ty type pe o BP BPM M ac acti tivi vity ty an and d th thee va vari rious ous ap appr proa oach ches es Characteristics o dierent BPM activity scenarios Examples o both aspects o the strategy execution void Strategic options characteristics BPM maturity metaphor BPM width implications Case study example o Red Wine est outcomes BPM activities and BPM approach OM components Foundations phase—risks and mitigation strategies
112 117 1244 12 127 152 158 160 162 165 166 169 171
13.9 13.10 14.1 14.2 14.3 14.4 14.5 15.1 15.2 15.3 15.4 15.5
Foundations phase—possible inputs Foundations phase—deliverables Process level structure details Business integration and standardization categories Enablement phase—risks and mitigation strategies Enablement phase—possible inputs Enablement phase—deliverables Process Worth Matrix Launch pad phase—risks and mitigation strategies Launch pad phase—possible Inputs Launch pad phase—deliverables Step and duration
175 175 188 197 214 218 218 237 249 262 253 260
15.6 Steps 15.7 Innovate phase steps and duration
261 267
xvii
TABLES 16.1 16.2 16.3 16.4 16.5 16.6 17.1
Cu C urrent issues o process modeling Future challenges o process modeling Fu Understand phase—risks and mitigation strategies Understand phase—possible inputs Understand phase—deliverables Sample SIPOC diagram Innovation activities
269 270 292 296 297 297 325
17.2 17.3 17.4 17.5 17.6 17.7 18.1
327 338 342 343 344 352
18.2 18.3 18.4 18.5
Innovation techniques Innovate phase risks and mitigation strategies Innovate phase—possible inputs Innovate phase—deliverables Format o workshop Sample schedule or realizing quick wins Relationship between between the the extent extent o cultural activity and the various BPM approaches Sample RASCI model Sample perormance targets Span o Control (team size) distribution chart People phase risks and mitigation strategies
18.6 18.7 19.1 19.2 19.3 20.1 20.2 20.3 21.1 21.2 22.1 22.2
People phase—possible inputs People phase—deliverables Develop phase risks and mitigation strategies Develop phase—possible inputs Develop phase—deliverables Implementation scenarios ypes o training Implement phase risks and mitigation strategies Beneit summary plan Realize value phase risks and mitigation strategies Sustainable perormance risks and mitigation strategies Sustainable perormance phase—possible inputs
382 383 408 410 411 417 420 427 438 447 461 463
22.3 24.1 24.2 24.3 24.4 24.5 25.1 25.2 25.3 25.4 26.1 26.2
SSu ustainable perormance phase—deliverables raditional versus BPM project management ype o project and type o project manager Individual stakeholder analysis Stakeholder analysis matrix Project management risks and mitigation strategies rust builders and busters Distinguishing AI rom traditional problem solving he art o the question in leadership and change Kotter’s change model and 7FE Framework BPM activities and the type o involvement Dierences between leaders and managers
465 474 475 486 487 496 514 520 522 527 535 537
26.3 Relationship between lead adeers rsh hip level, BPM activi vitty and involve vem ment 26.4 Leadership levels and components table
xviii
360 362 369 374 380
539 547
TABLES 27.1 27.2 27.3 28.1 28.2 29.1 29.2
Relation between level o BPM embedded and BPM maturity Dierence between Federated and Central Model Where should BPM reside? Executive risks and project risks Key pitalls D imensions o the BPM maturity model Di Delphi study participants
30.1a Deinitions o terms used in BPMM deinition 30.1b 30.1 b Dein Deinitions itions o terms used in BPMM deinition deinition (Continued) 30.2 An illustrative mapping to organization management theories
556 567 568 578 580 609 610 623 624 626
xix
CONTRIBUTORS
John Jeston has over 40 years’ experience in senior executive and consulting positions. Executing strategy to deliver business beneits is diicult. John has deep experience in working with senior executives in assisting them in business transormation and to set up their strategy or success. He has serious experience in getting things done—the right way. For over 40 years he has covered business transormation, Business Process Management (BPM), business process reengineering, project management, shared services creation, strategic procurement, systems development, outsourcing, and general management. He has
held the positions o Divisional Manager; Company Director; HR Director and Chie Inormation Oicer (within GM); and Partner. John is an internationally recognized thought leader in BPM transormation strategy and implementation. He has provided these services to signiicant organizations throughout Australia, Europe, Saudi Arabia, Dubai, the United Kingdom, Mexico, Brazil, Portugal, Asia, Russia, urkey, the USA and southern Arica. John has advised some o the largest organizations in the world on BPM implementations. He has authored a number o books and more than 30 articles on BPM and high perormance management, worked with the London Business School and the London Speakers Bureau. He is a regular speaker at conerences, a Master Project Director and is a Chartered Accountant. John can be contacted at:
[email protected]. Johan Nelis has a proven track record or over 20 years as an international Business Process Management and ransormation Advisor delivering results. He works or Oakton, an Australian Austra lian consulting consulting and technology technology irm (www.oakton.com.au) as as Business Improvement Practice Manager. He established and managed BPM practices in Europe and Australia. He was co-ounder and Vice Chairman o the Dutch BPM Forum and Chairman o the Sydney Forum. Johan started his career as Advisor to the United Nations. He is known or his eagerness to share knowledge and experiences, and is renowned or supporting and coaching executives and proessionals. He initiated many BPM training courses, presented at seminars and hosted workshops at BPM conerences around the world. Johan has successully completed BPM and ransormation initiatives in a wide variety o sectors, such as Finance, Retail, Property, Education, elecom and Government. He specializes in aligning processes with strategy, business objectives and I; Business & Finance
ransormation and execution o strategy to achieve the intended beneits. He has established and strengthened Centers o Excellence, perormed process audits, identiied undamental
xx
CONTRIBUTORS problems and provided quick wins as well as innovative and sustainable solutions; improved customer experience, assisted in improving service management and service integration, initiated and managed implementations o BPM; enhanced BPM maturity and achieved signiicant and sustainable improvement in perormance. Johan is available or international presentations and/or training. trai ning. He can be reached at:
[email protected] or http://au.linkedin.com/in/johannelis or http://au.linkedin.com/in/johannelis
CONTRIBUTORS TO THE THIRD EDITION Tonia de Bruin completed her PhD at Queensland University o echnology, Brisbane, Australia, while researching business process management maturity. Following her acceptacceptance as a CPA in 2001, onia obtained an MI rom QU in 2004. onia has an extensive background in the inancial sector, where she has worked or more than 20 years as both a manager and consultant. Experience managing process improvement projects has seen onia develop a strong interest in the relationship between business processes and I. Jerry Dimos is a Singapore-based management consultant with over 15 years’ experience helping Fortune 500 irms design and implement business transormation initiatives across
Asia Paciic. A highly experienced Business Process Management (BPM) practitioner, Jerry is a BPM advocate or its practical role in transorming complex irms into more agile and productive businesses. By optimizing the way work is perormed (the interplay between people, processes and technology), he has successully implemented projects to reduce waste, unnecessary complexity and process ineiciencies that lead to margin erosion. Jerry has used BPM tools and techniques to assist global clients, especially those growing or consolidating their operations in Asia to realign their traditionally ragmented operating models. he end result is a more agile, centrally managed, trade-eicient business model that delivers real and measurable shareholder value. In 2008, Jerry began research into applying BPM to the areas o Sales and Marketing, particularly in the highly competitive Consumer Markets sector. He has been helping clients leverage new technologies to integrate their end-to-end processes and single view o the customer to maximize the returns rom marketing investments. his is an area o particular interest to Jerry and he co-authored a book on marketing ROI in 2010, and has written several articles. Brad Power is the Principal, Palladium Group and a nd Executive Director, Process Management Research Center at Babson College. With over 20 years o management consulting and research experience across a variety o industries around the world, he addresses the important business opportunities and problems o clients clie nts by combining human, technological and business perspectives. From 1981 to 1997, Brad worked or CSC Index, the business reengineering irm. In addition to leading many process-innovation consulting projects, he led CSC Index’s research service in business reengineering or three years, working with over
30 senior executives leading major reengineering initiatives, and the ounders o business reengineering. Brad has an MBA rom UCLA and a BS rom Stanord University.
xxi
CONTRIBUTORS Michael Rosemann is a Proessor or Inormation Systems and Co-Leader o the Business Process Management Group at Queensland University o echnology, Brisbane, Australia. He received his MBA (1992) and his PhD (1995) rom the University o Muenster, Germany. His main areas o interest are business process management, business process modeling, enterprise systems and ontologies. In his current research projects he is exploring, among other things, the critical success actors o process modeling, issues related to process modeling in the large, and the actual application o process modeling. m odeling. Michael has intensive
consulting experience, and has provided process management-related advice to organizations rom various industries including telecommunications, banking, insurance, utility and logistics. Besides more than 40 journal publications, 70 conerence publications and 35 book chapters, he has published two books on logistics management and process modeling, and is editor o three books: Reference Modelling ; Business Process Management and Business Systems Analysis with Ontologies. Ontologies. He is a member o the Editorial Board o six journals, including the Business Process Management Journal . Andrew Spanyi is internationally recognized or his work on Business Process Management. He is the author o our books: Business Process Management is a Team Sport; More for Less: The Power of Process Management; and Operational Leadership. He has delivered keynote speeches at conerences in North America, Europe and
Australia. He has published over 40 articles with a broad cross-section o print and e-magazines. He is currently on the Board o Advisors with he Association o Business Process Management Proessionals. Previously he was an adjunct proessor at Babson College; a member o the research team at the Babson Process Management Research Center; and an editorial board member with the BPM Institute. He has over three decades o management and consulting practice experience. He has managed or consulted on over 140 major improvement projects and led the development and delivery o dozens o sales and management training programs. Amy Van Looy holds a Ph.D. in applied economics. She is a lecturer and scholar at Ghent University (Belgium). Beore entering academia, Amy worked as an I consultant, mainly as a business and unctional analyst, on various large e-government projects.
Her research ocuses on business process maturity and capabilities in both public and private organizations. Particularly, she builds a maturity theory based on a large sample o business process maturity models (BPMMs). Furthermore, to orient practitioners to the right BPMM, Amy conducted an international Delphi study with BPM experts, resulting in an online decision tool, called “BPMM Smart-Selector” (http://smart-selector.amyvanlooy.eu/). Other research interests include business process integration i ntegration and business process modeling (BPMN, UML). Her research and publications can be accessed at at http://www.amyvanlooy.eu/. http://www.amyvanlooy.eu/. Amy may be contacted via email (in
[email protected]). You can subscribe to her tweets at http://twitter.com/AmyVanLooy.
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FOREWORD Thomas H. Davenpor Davenpor t
his book shouldn’t be unusual, but it is. It should have been written a long time ago, but it wasn’t. All books on business process management should be similar to it, but they aren’t. Books that purport to tell people in organizations how to do something should be this clear, but they seldom are. Process management should have already been demystiied, but it hasn’t been. What’s exceptional about the book is its extraordinary common sense. It suggests seemingly prosaic ideas, such as that multiple dierent levels o process change are necessary under dierent circumstances, and that technology alone isn’t suicient to bring about process change. hese ideas seem obvious, but they are not oten encountered in the world o business process management, or BPM. In act, in order or you ully to appreciate the virtues o this book, you need to know something som ething about what’s wrong with BPM.
A B R I E F H I S T O R Y O F B U S I N E S S P R O C E S S M A N A G E M E N T he idea that work can be viewed as a process, and then improved, is hardly new. It dates at least to Frederick aylor at the turn o the last century, and probably beore. aylor and his colleagues developed modern industrial engineering and process improvement, though the techniques were restricted to manual labor and production processes. he aylorist approaches were widely practiced in the early 1900s, but were largely orgotten by mid-century. he next great addition to process management was created by the combination o aylorist process improvement and statistical process control, by Shewhart, Deming, Juran and others. heir version o process management involved measuring and limiting process variation, continuous rather than episodic improvement, and the empowerment empowerment o workers to improve their own processes. It turned out that Japanese irms had both the business need—recovering rom war and building global markets—and the discipline to put continuous improvement programs in place. Other irms in other societies have adopted continuous improvement and “total quality management” based on statistical principles, but it requires more discipline than most can muster. oyota, in particular, took these approaches and turned them into a distinctive advance in process management. he oyota Production System (PS) combined statistical process control with continuous learning by decentralized work teams, a “pull” approach to manuacturing that minimized waste and inventory, and treating every small improvement in processes as an experiment to be designed, measured and learned rom. But ew irms have
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FOREWORD been able to successully implement the PS, and even oyota has had more success with the approach in Japan than at its oreign plants. A somewhat less stringent approach to the PS is present in the “lean” techniques that many American irms have recently adopted. he next major variation on BPM took place in the 1990s, when many Western irms were acing an economic recession and strong competition rom global competitors, particularly Japanese irms. Business process reengineering added, to the generic set o process management ideas, several new approaches: •
the radical (rather than incremental) redesign and improvement o work
•
attacking broad, cross-unctional business processes
•
“stretch” goals o order-o-magnitude improvement
•
use o inormation technology as an enabler o new ways o working.
Reengineering was also the irst process management movement to ocus primarily on non-production, white-collar processes such as order management ma nagement and customer service. It did not emphasize statistical process control or continuous improvement. Many irms in the United States and Europe undertook reengineering projects, but most proved to be overly ambitious and diicult to implement. Reengineering irst degenerated into a more respectable word or headcount reductions, and then largely disappeared (though there are some signs o its return). he most recent process management enthusiasm has revolved around aro und “Six Sigma,” an approach created at Motorola in the 1980s and popularized by General Electric in the 1990s. In some ways Six Sigma represents a return to statistical process control; the term “Six Sigma” means one output deect in six standard deviations o a probability distribution or a particular process output. Six Sigma also typically involves a return to ocusing on relatively small work processes, and presumes incremental rather than radical improvement. Most requently, however, Six Sigma improvement techniques have been employed on an episodic basis, rather than continuously, and while employees are somewhat empowered to improve their own work, they are generally assisted by experts called “Black Belts.” Some irms are beginning to combine Six Sigma with more radical reengineering-like approaches to processes, or with the “lean” techniques derived rom the oyota Production System. It is simply too early to tell whether Six Sigma will continue to prosper; I see some signs o its weakening, but it is certainly still popular in many US irms. he approach to BPM described in this book is a welcome amalgam o all o these previous approaches. It doesn’t ocus heavily on statistical process control or bottom-up experimentation, but addresses the basics o process improvement and change. It doesn’t view I as being the core o process change, but doesn’t ignore it as did QM and Six Sigma. It considers all o the major vehicles by which organizations understand, measure and change how they work.
LESSONS FROM HISTORY What can we learn rom this history, and how does it relate to the book you have in your hands? First, it’s clear that process management has been somewhat addish in the past.
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FOREWORD It has been a bit immature, coming and going in various orms as a management ad. his does not mean that there is no value to the concept—indeed I am a strong believer in it—but rather that managers and irms may have latched onto the more ashionable, short-term elements o the approach instead o the more timeless ones. Some managers have even made comments to me such as the ollowing: “We’re doing Six Sigma—we’re not really into process management.” his inability to see the orest or the individual tree is problematic i (or, more likely, when) the appeal o an individual process management oering begins to ade. Perhaps the excitement o a “new” approach (or at least a new combination o previous ideas with a new name) is necessary to get people excited, but the problem is that they become less excited ater a time with each new variant o process change. Basic business process management—the essence o each o these addish enthusiasms—may not be sexy, but it is clearly necessary. Perhaps it should be adopted whether it is sexy or not, and then maybe it will persist over the long term at a moderate level o popularity. his book is admirably ree o addish elements, and provides a good guide to the basic principles o process management. he authors reer to the “demystiication” o process management, and they are correct that the ield has been clouded by addishness and mystiication or ar too long. It’s also apparent that process management, as it i t has changed over time, is an increasingly i ncreasingly synthetic discipline. his book, I am happy to note, also takes a synthetic, broad approach to process management. Each new process management approach has built on previous oundations, and added one or more new elements. Ideally, an organization would be able to draw upon all o the elements or tools available to meet the process management needs o any individual project. However, to wrap all o the possible process management tools into one consolidated approach would be a bit unwieldy. hey can’t all it into one normal-sized book. hereore it seems likely that, in the uture, irms will assemble the tools they need to address a particular project using a customized or conigured methodology. Such a coniguration process would require either very experienced process management consultants who could assemble the proper tools or perhaps even sotware that could help a less experienced user conigure a methodology. Despite these methodological issues, process management all boils down to human change. his is true o all variations on process management. As Jeston and Nelis point out, people are the key to implementing new process designs. I they don’t want to work in new ways, it is oten very diicult to orce them to do so. Hence any successul process managemanage ment eort requires a strong emphasis on culture, leadership and change management. Several chapters o the book are devoted to these issues. Process management doesn’t replace everything else in organizations, and it’s not a panacea. here have been other authors and publications that have strongly suggested that all an organization needs to do to be successul is process improvement. his book does not make that mistake; it simply argues that process management must become one o the abiding approaches to managing organizations. It must augment and align with strategy, human resource management, inancial management, inormation management and the other traditional management disciplines. his and other perspectives within the book may appear to be only common sense. hey are indeed sensible, but they are not suiciently common.
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PREFACE
his book began in 2003, when I was engaged in the early stages o a BPM project within a large inancial organization. I was struggling with how to help develop the skills o the consultants in our BPM consultancy practice aster than just “on the job training.” I searched the Internet and book shelves or a comprehensive text on “how to successully implement a BPM project.” I did not just want a big picture view but a detailed step-by-step guide that we could give to our consultants and clients, and one that would orce me to be less intuitive (although I still think this is the most powerul insight one can have) and more ormal in approaching BPM projects. So I started to document my thoughts over the next twelve months. In mid-2004, we received the resumé o Johan rom the Netherlands, where he headed up the BPM practice o Sogeti (part o Cap Gemini). Johan was looking to migrate to Australia; here he joined me in a BPM consultancy practice and soon thereater we began the journey o completing this book. he journey has continued spectacularly ast as I have been invited to travel all over the world to deliver conerence keynote speeches, talks, training, advice and consulting services to many varied organizations, including some extremely large commercial and government organizations. his has enabled me to gain a unique insight to the critical success actors, what works well and what could have worked better within organizations; and it has continued to provide practical intellectual property or urther editions o this book.
John Jeston I have always ound it amazing that in a time o inormation, the skills and expertise o a BPM consultant are still predominantly based on experience, and grey hair is still an indicator o this. BPM is still more an art than a science. here are very ew sources o inormation or people to rely on when delivering a BPM project: there are very ew good books that cover all the relevant aspects; Internet searches are crowded with advertising o vendors; and ew seminar or training courses live up to their promises. I have always been very passionate about exchanging expertise and experience—right rom my irst job at the United Nations Industrial Development Organization which was not just about achieving results but also knowledge transer. During my career at Sogeti B.V., B.V., he he Netherlands, I enjoyed the support and opportunities provided to develop process reerence models and guidelines; give BPM training and lectures as well as setting up a BPM expert
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PREFACE group and the Dutch BPM Forum. Jeroen Versteeg and Klaas Brongers have been very supportive in this regard. Writing a book that combines both a holistic view and the necessary details has been a long cherished dream. When I moved to Australia and John told me about his plans or this book and showed me the outline o the Framework, I knew that this dream would be ulilled.
Johan Nelis
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INTRODUCTION
WH HO IS THIS BOOK FOR? W Business professionals •
Senior business executives seeking an understanding o what BPM is; the critical success actors; and why and how to implement it within their organization.
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Information systems managers and Chief Financial Officers also involved in supporting the implementation o BPM and process management.
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Project managers on how better to manage a process-ocused project or program o work.
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Process professionals, process analysts and business analysts to enhance their learning on how to implement BPM and process-ocused activities; together with detailed tools and templates.
Students his book provides students with the ability to gain a practical example and understanding o how to implement Business Process Management rom a small BPM activity or project inside an organization through to an enterprise-wide process-ocused business transormation program. It will support the ollowing students in their studies:
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•
Professionals studying; postgraduate students on specialist Master’s degrees; MBA students. students . Te book provides a comprehensive coverage o business processes, and process management and implementation. It will provide non-business proessionals (or example, engineers, scientists) with an understanding o business and process management.
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Undergraduate students who select this topic to gain an understanding o how businesses work in practice and how to complete process-based projects improvements and business transormation.
INTRODUCTION
W H A T D O E S T H I S B O O K O F F E R T O L E C T U R E R S WH TEACHING THESE COURSES? his book is intended to be a comprehensive guide to all aspects o implementing and managing BPM or process-ocu process-ocused sed business transormation activities within an organization organization.. It is based upon sound research r esearch and wide and deep consulting experience with international BPM programs. Lecturers will ind this book has a wide range o case study examples to support their teaching. A student assignment has been included that may be used to provide the context and guidance through a practical BPM activity. his assignment will be continually updated and improved with the latest version always available on a secure website speciically or lecturers. A sample answer will also be provided on the secure website. As with any business project, there may be several “correct” answers. We would encourage lecturers to provide the authors with samples o their best student answers answe rs and these will be reviewed and a nd posted on the secure website or the beneit o all lecturers, with the lecturer’s and student’s permission. he latest tools and templates will be posted on: www.managementbyprocess.com on: www.managementbyprocess.com or or the beneit o students and lecturers. Again you are welcome to contribute towards the enhancement and urther development o these tools and templates by sending suggestions to:
[email protected].
LEARNING FEATURES A range o eatures have been incorporated in the book to help the reader get the most out o it. hey have been designed to assist understanding, reinorce learning and assist readers to ind inormation easily. he eatures are described in the order you will ind them. At the start of each chapter:
•
Overview:: a short introduction to the relevance o the chapter and what you will learn. Overview
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Overall learning outcome: outcome: a list describing what readers can learn through reading the chapter and completing the sel-test.
In each chapter:
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Key Points: Points: critical aspect to the topic reerred to in the text.
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BPM Insight: real-world examples o best practice approaches.
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Case Studies: Studies: examples o areas where organizations or consultants have executed things well or not so well. Each case study is provided with a “Message” at the end o it—the lesson to learn as a result o the case study.
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INTRODUCTION In Part II o the book, the section explaining the 7FE Framework, each chapter is also structured to include: •
Why : is this phase necessary?
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Results:: that will be expected once this phase has been executed. Results
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How:: the detailed steps involve in the execution o the phase. How
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Outputs to other phases: phases: how this phase contributes towards the success o other phases and eeds back into earlier phases.
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Phase risks: risks: the typical risks that are associated with this phase.
At the end of each chapter:
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Summary : intended as a revision aid and to summarize the main learning points rom the chapter.
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Self-test questions: questions: short questions that will test understanding o terms and concepts described in the chapter and help relate them to your organization.
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Assignment : urther inormation on the assignment and guiding questions to assist in the completion o the assignment (or chapters 12 to 26).
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Checklists: where appropriate checklists have been provided to assist you in the execution Checklists: o your BPM activities.
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Extra reading : supplementary inormation on the main themes within the chapter.
At the end of the book:
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•
Glossary : a list o definitions o all terms and phrases used within the text.
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References and bibliography : a list o books and articles rom where some o the inormation was sourced and suggested additional reading.
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Index : all key words and abbreviations reerred to in the main text.
INTRODUCTION TO INTRODUCTION THE THIRD EDITION he understanding o BPM and process management has not stood stoo d still over the last ive years since the second edition o this book. he authors have continued to work with many organizations in the development and implementation o BPM strategies. his has allowed us to encounter many dierent and varied business challenges. With challenges come solutions, and it is these challenges and solutions that we wish to share with the readers. he most dramatic evolution in BPM has been b een the growing acceptance that BPM is not about the improvement o operational processes alone. BPM is a management discipline ocused on using business processes as a signiicant contributor to achieving an organization’s strategy and business objectives by signiicantly and sustainably improving perormance. Business Process Management is more relevant than ever beore and will assist in enabling management to achieve a competitive advantage in a turbulent environment. Our current environment is categorized by undamental shits in business models; increased internationalization; increased market transparency; a need to support mobile, social and Cloud unctionality; and a need to service more inormed, vocal and demanding customers. hese trends and how to anticipate and leverage them is now a undamental necessity in business. You will read in Chapter 1 (What is business process management?) about the BPM House; a metaphor or what is BPM and what are the various components. Many o the initial ten chapters have either been rewritten or substantially updated. he original two phases o the 7FE Framework (Organization Strategy and Process Architecture) have been replaced with BPM Foundations and BPM Enablement. hese chapters are totally new and have a unique approach to the building o an enterprise-wide approach to the implementation o a process-ocused transormation program. his is critical i you wish to create a sustainable competitive advantage within your organization. You will learn in Chapter 5 (How should we start—bottom-up or top-down?) that the authors have never seen a bottom-up approach to BPM work, enterprise wide; not unless it changes rom bottom-up to top-down. You will learn what you need to do, rom a process perspective, to ensure that a sustainable competitive advantage is created within your organization. Furthermore, the online appendices have been collapsed and where appropriate included or each chapter.
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INTRODUCTION TO THE THIRD EDITION We are very proud o the book because it has become accepted internationally by both business and educational institutions. It is used in many organizations as the preerred method o implementing BPM. It has become used in many universities by proessors and lecturers as a textbook and reerence book. A wonderul example o this acceptance is the story o one CEO who was so impressed with it that he had it translated into his language and then made it mandatory reading or his executives and managers; and they are ar e tested on it to ensure they have read and understand it. his international organization employs more than 250,000 people worldwide. his third edition has a number o new eatures which you will notice: •
It is in ull color
•
Enhanced Enhance d pedagog pedagogy: y: now incl includes udes learn learning ing outco outcomes; mes; chap chapter ter topic topics; s; learnin learningg objecti objectives; ves; highlighted key points; chapter summaries; and sel-test questions
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Enhanced ca case st studies
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Spec Sp ecifi ificc deta detail iled ed cas casee stud studie iess rom rom thr three ee con conti tine nent ntss
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A reade readerr assign assignmen mentt that that allow allowss the the reader reader to to make make the the learni learning ng conc concret retee
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A link link to the the publis publisher her’s ’s websit websitee or an an abilit abilityy to inter interact act with with the the autho authors rs and and obtain obtain the latest material on the assignment
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A lin link k to to th the lat lateest BP BPM M too tools ls at at www.managementbyprocess.com. www.managementbyprocess.com.
LAYOUT OF THIS BOOK he book is divided into three parts with each having a unique ocus. •
•
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Part I is aimed at executive level questions and takes a holistic view to a process-ocused organization. It asks and provides answers to ten questions. While all these questions do not need to be addressed beore an organization commences its BPM journey, some
do. All questions will however need to be addressed and answered along the journey. Part II comprises a detailed explanation explanati on o the 7FE Framework. It explains the ten phases and three essentials that are required to be b e successul. his is where the reader assignment a ssignment is undertaken.
•
Part III comprises a chapter that includes three detailed case studies rom the USA, Asia and Europe. It also includes two chapters on BPM maturity. One o these chapters is new and provides an insight into how an organization should select a BPM maturity model that is appropriate or itsel.
•
Within the comp Within compani anion on websi website te there there are are two two append appendice icess that that provid providee a summar summaryy o the the 7FE Framework (phases, steps, tools and techniques, deliverables and gates) and the 7FE Framework Quality Assurance Checklist or project/program managers.
AC A CKNOWLEDGMENTS
It has been a journey as we have researched and developed the tools and techniques in this book. It is an approach to BPM projects and organizational transormation that has been honed over many practical international consulting engagements, case studies and research. he ramework, approaches, scenarios, phases, steps, tools and techniques are what we use in our day-to-day BPM consultancy. Without the ability to consult and develop the intellectual property “on the job” within many large organizations this book would not have been possible. However, no book can be written in isolation, and there are people we would like to thank who have reviewed, contributed to, critically commented and debated with us in the development o this third edition. In particular we would like to thank Dr Adrian Rossi and Gina Craig. Adrian’s knowledge o BPM technology and implementations is outstanding. He has donated his time to reading and commenting upon drats o the entire book, and contributed in part to Chapter 7, the technology components o a BPM system. Gina critically read and edited many chapters in the book and greatly added to the clarity o many chapters. Once a robust drat o the book was completed, several people contributed their time in reviewing, commenting and making suggestions or improvement. his has signiicantly contributed to the betterment o the inal outcome. As always it is the authors’ responsibility or the inal product. We would like to speciically thank: Proessor Jan Recker, Michelle Parker, Adrian Rossi and Dr Ral Eder. Finally, we would like to thank our editorial team o Amy Laurens and Rosemary (Rosie) Baron. hank you or your trust, support, never-ending encouragement and good humor throughout this journey.
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TRAINING SERVICES
Management by Process Pty Ltd oers complete advice, training and coaching services in Business Process Management and process-ocused business transormation programs. he training courses cover the content o this book and other BPM-related topics. Please reer to www.managementbyprocess.com to www.managementbyprocess.com or course outlines, testimonials and urther inormation.
NEW DISTRIBUTOR AND PARTNER ENQUIRIES Distributor and partner opportunities are available or qualiied BPM experts and expert organizations or the training material and courses. I you are interested please contact in
[email protected].
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POSITIONING OUR BOOKS his book provides a practical guide to the successul and repeatable implementation o BPM activities. hree reprints in the irst year, the release o a second edition, a number o translations into other languages and now this third edition highlight the enormous demand or practical common sense guidance on businesses running their organizations via process management. Many readers have reacted and welcomed our suggestions regarding BPM activities. However, many o you now ace the next challenge: how to achieve a process-ocused organization. hat is, not just to be able to successully implement BPM activities but move to the next stage o maturity where an organization needs to support perormance management by its processes. his is depicted as part o Figure 0.1 Process Leadership
Strategy
Process Governance
Process Performance Process Execution
People Capability
Process Execution
Technology
Management by Process
Figure 0.1 Management by Process Framework
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POSITIONING OUR BOOKS Strategy is the oundation and starting point or the ormulation o an organization’s strategic objectives. However, the strategy is only one part o the journey. Without an outstanding competency in strategy execution, then success will not ollow. We believe it is essential to distinguish between two types o execution—project execution and process execution. Project execution is the topic o this book bo ok you are reading now. Process execution is the Managementt by Proces Process: s: A Roadmap to topic o the our second book which is titled: Managemen Sustainable Business Process Management . In our experience with coaching and advising organizations with the implementation o BPM, we have ound that the ollowing seven dimensions are critical in the achievement o a truly process-ocused and high perormance management organization: 1.
Pro roccess le leadership
2.
Pro roccess go governance
3.
Pro roce cess ss pe per ror orma manc ncee
4.
Stra St ratteg egic ic al alig ignm nmen entt
5.
Peop oplle capabil iliity
6.
Pro rojject executio ion n
7.
echnology.
For more inormation please visit www.managementbyprocess.com We would be delighted to receive readers’ eedback and suggestions. You can provide this by emailing us at: in
[email protected]
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Part 1
FREQUENTLY ASS K E D A QUESTIONS
1
The important thing is not to stop questioning. (Albert Einstein)
Part I is aimed at an executive level of questions and takes a holistic view to a process-focused organization. While all of these questions do not need to be addressed before an organization commences its Business Process Management (BPM) journey, some do; however, somewhere along that journey all will need to be considered. Indeed, the answer to some of the questions will determine how you should start BPM in your organization. In this third edition of the book we have introduced several new questions to ensure that evolving and contemporary BPM questions are answered. The global financial crisis from 2008 has forced many organizations to take a critical look at their performance, and business process performance, management and control are critical aspects. We start in Chapters 1 and 2 by providing an explanation of “What is BPM?”; why some people find BPM a little confusing and why it is different from what has come before. This still requires attention, as many people either don’t understand or misunderstand these key concepts. It is critical to know who should be involved in BPM and what the critical success factors are. For an organization and its management, it is critical to have a clear understanding of when you should do BPM and what the main drivers and triggers are. These questions are covered in Chapters 3 and 4. How to start is always an important consideration. Should it be top-down or bottom-up? This is discussed in Chapter 5. Our experience of implementing BPM transformations, programs and projects all around the world has led us to believe it is important to improve the processes before, or as part of, automating them. This is addressed in Chapter 6. Given the importance of BPM technology and the opportunities that it is starting to offer, we outline the nine technology components of a complete BPM technology solution together withLean some theyou future. The majority of in theChapter literature7,on BPM and willthoughts tell youofthat must be customer-centric and focus on the customer experience. Is this true? Is it the best approach to achieving customer service and satisfaction? This question is what Chapter 8 is all about. We then discuss why determining or creating the right foundations for BPM is critical to success in Chapter 9. In the final chapter of this part, we address why you need a structured approach to implementing BPM if you want to optimize your business benefits and likelihood of success. All human progress is preceded by new questions. (Anthony Robbins, Awaken the Giant Within )
2
CHAPTER 1
WH W H AT I S B U S I N E S S PROCESS MANAGEMENT? OVERVIEW There are many definitions of BPM and to enable you to gain the most from this book we need to have a common understanding.
OVERALL LEARNING OUTCOME By the end of this chapter you will be able to: • App Apprec reciat iatee that that BPM is no nott ALL ALL abo about ut tec techn hnolo ology gy • Hav Havee a wor workin king g defi definit nitio ionn of of BPM BPM • Understan Understand d at a high high level level the BPM BPM House House and how how the the componen components ts are essential for BPM success and sustainability.
his is a question that needs to be asked and addressed right at the very beginning to ensure we have a common understanding. here are as many answers to this question as there are vendors, analysts, researchers, academics, commentators, authors and a nd customers. BPM is just like many other three-letter abbreviations in the recent past, such as CRM (Customer Relationship Management) and ERP (Enterprise Resource Planning), which have been misused and misinterpreted. In time these terms have mostly come to a common interpretation; BPM has still to achieve this status. Currently, BPM is being used by: •
some ven vendors dors who only only ocu ocuss on the the tech technol nology ogy solut solution ion o o proces processs improv improveme ement. nt. Tis Tis is still true or some o the world’s largest technology companies;
•
other vendo other vendors rs who who think think o o BPM as busin business ess proc process ess mode modelin lingg or busin business ess per perorm ormance ance management;
3
FREQUENTLY ASKED QUESTIONS •
some consul some consultan tants ts who who use use BPM to to contin continue ue their their mess message age on on busine business ss proce process ss reengineering or improvement;
•
other oth er consu consulta ltants nts who use use BPM BPM to sell sell thei theirr Six Sigm Sigma/L a/Lean ean mess message age to to execut executives ives;;
•
some manage some managers rs who who want want to jump jump on on the the BPM ban bandwa dwagon gon,, with with no idea idea wher wheree it is is going;
•
somee proces som processs analys analysts ts who who use BPM BPM to to inate inate thei theirr proces process-m s-model odeling ing aspi aspirat ration ions. s.
In our opinion, BPM does not equate to a technology tool or initiative or business processes. In our experience, there is signiicant business process improvement that can be achieved without technology. Can BPM involve technology, and is technology a good thing? Absolutely, in the right circumstances and when it can be justiied. Are Business Process Management Systems (BPMS) and process modeling tools useul or achieving process improvements in non-technology circumstances? I the tools reerred to are used in the right way, then yes, they can be extremely useul in this process. In act, it is diicult to complete complex process improvement projects in a time-eective manner without the use o these tools.
BPM INSIGHT
One word of caution: there is a danger of organizations believing that once they have purchased a BPMS or process-modeling tool, it will solve all their problems and the process improvements improvem ents will just follow. Nothing could be further from the truth. A BPMS or process-modeling tool is just a piece of software, and without a methodology or framework, skilled resources to use it and a genuine commitment from organizational leadership, it is useless: remember the saying “a fool with a tool is still is fool.”
Reer to the Extra Reading section at the end o Chapter 27 (Embedding) or how to select a process-modeling tool. I you are going to use a process-modeling toolset in your BPM program or projects then we actively encourage you to use the opportunity to build a process asset. What is a process asset, how it is populated, what are its beneits and use to the business will be discussed in more detail in Chapter 13. Many o the industry commentators and vendors provide deinitions that speciy technology (automation tools) as an essential component o BPM—in act they say that BPM is technology. However, i you take a simple and commonsense view o BPM, it is about the management of business processes which will be around or a very long time.
KEY POINT A definition for BPM is: A management discipline focused on using business processes as a significant contributor to achieving an organization’s theprocesses. improvement, ongoing performance management and governance objectives of essentialthrough business
4
WHAT IS BUSINESS PROCESS MANAGEMENT?
Table 1.1 Definition of terms used in our definition of BPM Management Management discipline
Management need to clearly clearly understand understand that business processes processes are a fundamental and critical part of business success. The proactive management of these business processes will significantly assist in the delivery of an organization’s strategic objectives. Process management needs to be a fundamental part of how the business is managed and executive commitment is essential.
Proc Pr oces esse sess
What is a proc What proces ess? s? Th Ther eree are are as ma many ny de defin finititio ions ns of pr proc oces esss as as the there re ar aree processes. However perhaps taking a simple view is best, “it is the way things get done around here.”
Achievem Achi evement ent
Realizing the strateg Realizing strategic ic object objectives ives as outlined outlined in the the organiza organization’ tion’ss strategic strategic plan. At a project level, it is about realizing the value or business benefits as outlined in the project business case and at a process level it is about achieving the team’s operational targets.
Organiza Orga nization tion The organiza organization tion in this this context context refers refers to either either the entire entire organiz organizatio ationn or parts of it, perhaps a business unit that is discrete in its own right. BPM relates to the end-to-end business processes associated with this part of an organization. This end-to-end focus extends beyond the boundaries of the organization and should include suppliers and customers, which should lead to a minimization of the silo effect within most organizations. Objec Ob jectiv tives es
The obj object ectiv ives es of of a BPM im imple plemen mentat tation ion ran range ge fro from m the the str strate ategic gic goa goals ls of of the organization through to the individual process goals. It is about achieving business outcomes. BPM is not an objective in itself, but rather a means to achieving a business objective. It is not “a solution looking for a problem.”
Improvem Impr ovement ent
Improvement Improveme nt is is about about makin making g the the busine business ss process processes es more more effici efficient ent and effective or indeed turning an organization or industry value chain upside down or inside out. An example of this is a business transformation approach to BPM.
Performance managem man agement ent
This refers to process and people performance measurement and managemen mana gement.t. It is about about organ organizin izing g all all the the essentia essentiall compon components ents and subcomponents for your processes. By this we mean arranging the people, their skills, motivation, performance measures, rewards, the processes themselves and the structure and systems necessary to support a process.
Governance of proce processes sses
BPM is about managing your end-to-end business processes both now and intoo the futu int future re to ensu ensure re they they are are always always rele relevan vantt to the the busine business. ss. An essential component of governance is to have the ability to measure correctly. If you cannot measure something, you cannot continually improve and manage it. Process governance is also essential to ensure that compliance and regulations are adhered to.
Esse Es sent ntia iall
Not ev Not ever eryy pro proce cess ss in an org organ aniz izat atio ionn co cont ntri ribu bute tess tow towar ards ds th thee ac achi hiev evem emen entt of the organization’s strategic objectives. Essential processes are the ones that do.
Busi Bu sine ness ss
An im impl plem emen enta tatition on of BP BPM M mus mustt hav havee an an imp impac actt on on the the bu busi sine ness ss by delivering benefits. It should focus on the core business processes that are essential to your primary business activity—those processes that contribute towards the achievement of the strategic objectives of the organization.
5
FREQUENTLY ASKED QUESTIONS It is important to have a common understanding o what we mean by each o the signiicant words in our deinition, so each is deined individually in able 1.1. hus, process management is an integrated part o “normal” management. It is important or leadership and management to recognize that there is no inish line or the improvement o business processes; it is a program that must be continually maintained. As a management discipline BPM requires an end-to-end organizational view and a great deal o common sense throughout the organization. Now that we have provided a deinition o BPM, let’s examine what this means in practice within an organization. here are many ways to commence BPM activities activi ties within an organization and the “right” way will depend upon many actors, such as the organization’s culture, process maturity, business drivers, to name a ew. here are also several types o BPM activities that may be commenced. Chapter 5 will outline our typical types o BPM activities that will be reerred to throughout the book. It also addresses the question o whether the BPM activities should start rom the bottom-up or the top-down and why. Figure 1.1 provides a metaphor to describe BPM with all the necessary components o an organization-wide BPM program strategy. It introduces many terms and some o them may be new to you. I this is the case, please reer to the glossary section or a deinition or explanation. A metaphor o a house has been used in this book—the BPM House. When building a house you need to have solid oundations or it will not be stable as the walls are erected and the roo installed. BPM is no dierent. he oundations o the BPM program (BPM Foundations and Enablement) need to provide a solid operational ocus that has been agreed and is visible across the organization. Senior management is responsible or determining the organization strategy and ensuring that the business processes support, or contribute to, the ulillment o the strategy. Processes that are aligned with the strategy are most eective in achieving business objectives and are more sustainable in the medium to long term. he purpose o the BPM Foundations and Enablement is to provide the necessary discussion, determination, agreement and documentation o the high level “oundation rules” or the business and BPM team to work within and apply. he Foundation is determined by the senior management team and provide the very high level outline o these “rules”; while Enablement takes these high level “rules” “rul es” and expands upon them to make them usable or the business and BPM teams in their execution o BPM programs and projects. Chapters 13 and 14 provide the detail. he walls provide an outline o the program o work, the rameworks or how the work will be achieved, how the business will be operated and, importantly, how it will be aligned with the organization’s strategy. his is where BPM activities:
6
•
align with align with the the organiz organizati ation’ on’ss strateg strategy; y; ensur ensuring ing that that all the the BPM BPM activit activities ies contr contribut ibutee towards the strategic objectives (strategic alignment);
•
determine determ ine the the priori prioritie tiess o which which busi busines nesss proces processes ses to to enhanc enhancee first; first; and and whethe whetherr working on the Management Processes or Operational Processes first will bring the most benefit to the organization (or perhaps both together). Chapter 13 (Foundations phase) will define and explain the difference between these two types o business processes (management processes and operational processes);
WHAT IS BUSINESS PROCESS MANAGEMENT?
Organization, Sustainability & Performance Management Organizational process Process governance Performance management asset Benefits management framework Organizational culture
•
•
•
•
•
Strategic Alignment
Business Strategy
• • •
Management Processes Project selection & prioritization Strategic decision making Simplification
•
Portfolio management Business innovation Formalized learning Agility/scalability
• •
Strategic Themes
•
• •
•
•
Operational Processes Core operational processes: Order to activate Procure to pay
Supporting processes: Finance Human Resources IT
Process Change (Business Process Improvement) Process-focused project management People change management Improvement methodology •
Program(s) of work • •
Benefits realization Process governance
Operate Manage Sustain Performance management •
BPM Enablement Elements providing supporting capabilities to enhance and enable the delivery of all components of the BPM Strategy BPM Foundations A BPM target operating model comprising a set of driving business foundation principles principles and guidelines
Strateg Strategy y
Process Proc ess
to manage business processes Organizati Orga nizational onal desig design n Performance Perfor mance manage management ment
People Peopl e
Governance Governa nce
Technol echnology ogy
Figure 1.1 BPM House: components of a BPM program strategy •
use the the Proce Process ss Chang Changee (busin (business ess proc process ess impr improve ovemen mentt (BPI) (BPI) and and people people chan change ge man management) age ment) methodologies or rameworks. Tese should be selected and in place first, ensuring the business and BPM team are trained in it (process change);
•
Operate, Operat e, Manag Managee and Sust Sustain ain aspe aspect ct reer reerss how BPI BPI proje projects cts will will be be handed handed over over to to the business in a sustainable way.
Unless all these components are either in place or in progress within an organization, it will not be able to improve the eiciency and eectiveness o the organization’s business processes in a sustainable way. he BPM roo (Organization Sustainability and Perormance Management) holds it all together by providing the organizational-wide process ocused culture and governance structures resulting in managing the organization via its business processes. he creation and management o a process asset will greatly assist in meeting these objectives. Without this BPM roo, all the beneits gained rom improving the management and operational business processes will dissipate over time; sometimes rapidly. We will discuss the BPM House in more detail during Chapters 13 and 14 when we discuss the BPM Foundations and Enablement phases o the 7FE Project Framework. he 7FE Framework is the main ocus within this book and provides the ramework guidelines or successul BPM programs and projects. Once BPM is viewed as outlined in the BPM House it becomes clear that BPM provides an organization with the ability to commence and sustain a program o work that can
7
FREQUENTLY ASKED QUESTIONS
Y A large telecommunications organization had spent a year and many millions of dollars D establishing BPM foundations within the organization. It was about to commence several large BPM projects across the organization and they were still having difficulty explaining U and gaining agreement on what exactly BPM was for them. T The metaphor of the BPM House, slightly modified to its circumstances, provided the S E S A C
mechanism for agreement within the organization.
transorm its business. BPM will provide the mechanisms or changing the business value chain, disrupting industry value chains, substantially altering the way business and decision making is conducted. It will allow customers and employees to be delighted with the services provided by the organization, while simultaneously reducing the organization’s costs. When an organization’s management processes are addressed, as shown in the BPM House, the organization is provided with an opportunity to create a sustainable competitive advantage; but more o this later. While the BPM House may appear a little overwhelming to some now, once the 7FE Framework is introduced (rom Chapter 11 onwards) it will be explained and expanded upon in ar more detail. I you wish to learn more immediately on the BPM House, read Chapters 13 and 14 now.
SUMMARY BPM is: • mor moree than than jus justt soft softwar waree • more than than just improving improving or reengin reengineering eering your your processes—it processes—it also also deals with with the managerial issues • not just just hype—i hype—itt is an inte integral gral part part of manag management ement • more than than just modeling modeling—it —it is also about about the implemen implementati tation on and executio executionn of these processes, and • the BPM House House provides provides a metapho metaphorr for the foundat foundations ions,, walls and roof roof of an enterprise-wide implementation of BPM.
8
WHAT IS BUSINESS PROCESS MANAGEMENT?
SELF-TEST 1 Can you implement a BPM project without technology? 2 Name a couple of ways how technology can assist with BPM in your organization. 3 your How definition? would you define BPM and explain each of the key words/phrases in 4 Explain each of the aspects of the BPM House, each of the sub-components and why you think they will be important to an enterprise-wide implementation of BPM?
9
CHAPTER 2
HOW CAN WE DEMYSTIFY BUSINESS PROCESS MANAGEMENT?
OVERVIEW Many people find the term BPM a mystery. There is no one definition among the experts and management sometimes wonder if it is yet another three-letter acronym or management fad that will disappear in the next few years. We will explain the history of BPM and then some of the realities of it.
OVERALL LEARNING OUTCOME By the end of this chapter you will be able to: • Expla Explain in the the histo history ry of BPM and and where where it evolve evolved d from from • • • •
Clarifyy if it is Clarif is just just the next next “big “big thin thing” g” or not not Expl Ex plai ainn the the BP BPM M hyp hypee cyc cycle le Appreciate Appre ciate what is mysti mystifyin fying g about about BPM and why Explai Exp lainn reali reality ty vers versus us perc percept eption ion..
BRIEF HISTORY OF BUSINESS PROCESS MANAGEMENT he road to Business Process Management (BPM) has been a diicult one that was developed rom the successes and ailures o various other attempts at achieving process-based organizational eiciency. It has only been in the last several years that BPM has started to gain signiicant momentum in many organizations around the world.
10
Scientific Management
Process Thinking Business Process Reengineering Lean
Six Sigma Total Quality Management
Business Process Management
Kaizen Blitz ISO
Quality Thinking
SOA Cloud Computing Business Process Management Systems Business Rules Document Management Workflow
Automation
Figure 2.1 How did BPM emerge? Perhaps it is worthwhile taking a ew moments to understand the short history o management’s ocus on business processes and where BPM had its origins. Figure 2.1 shows these origins. In the 1980s there was a considerable ocus on quality thinking. his was brought to management’s attention with the ocus on otal Quality Management (QM), Six Sigma, ISO and then the concepts o Kaizen (Blitz). he concept o process thinking originated at least as ar back as Frederick aylor in the early last century. It was then supported in the early 1990s by Business Process Reengineering (BPR) as originally written about by Davenport and promoted by Hammer and Champy (1990). BPR had a checkered history, with some excellent successes as well as ailures. Lean also gained momentum together with its variants. In the mid- and late 1990s automation started to come into its own with Enterprise Resource Planning (ERP) systems gaining organizational o rganizational ocus and became the next big bi g thing. hese were supposed to deliver improved ways or organizations to operate, and were sold by many vendors as the “solution to all your problems.” he ERP systems certainly did not solve an organization’s process issues, nor make the processes as eicient and eective as they could have been. owards the end o the 1990s and in the early 2000s, many Customer Relationship Management (CRM) systems were rolled out with extensive ocus on the customer view v iew and customer experience. While this provided ocus on the ront oice, it did not improve the back-oice processes. Automation then grew into the concept o worklow and business rules engines, which then morphed into Business Process Management Systems (BPMS) which we will discuss in detail later in Chapter 7. BPMS incorporated many aspects o technology
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FREQUENTLY ASKED QUESTIONS including integrated document management. Cloud computing has now added a signiicant and exciting dimension to the possibilities o a process view o the world. All these components started to merge to bring business processes more to the thinking o management and the term Business Process Management was coined. At the end o the day, the term is not important. What is important is an organization’s or ganization’s ocus and ability to manage its business processes and this involves people. According to Hammer (1993), “Coming up with the ideas is the easy part, but getting things done is the tough part. he place where these reorms die is . . . down in the trenches” and who “owns” the trenches? You and I and all the other people. Change imposed on the “trench people” will not succeed without being part o the evolutionary or revolutionary process:
Forceful leadership can accomplish only so much. The shift from machine-age bureaucracy to flexible, self-managed teams requires that lots of ordinary managers and workers be psychologically prepared. (Hammer, 1994)
THE NEXT BIG THING (OR HOW MYSTIFICATION BEGINS) While the term BPM has been around since the very late 1990s and early 2000s it is still yet another three-letter acronym! So why was BPM considered the “next big thing,” and why do the “next big things” invariably come and go? here are usually our steps to the creation o a “next big thing”: 1.
Te concep conceptt promoters promoters (vend (vendors/an ors/analyst alysts, s, etc.) etc.) hype hype it it up to the the market market in their advertising, sales pitches, promotional materials, research and successul case studies.
2.
Tese promot promoters ers then then tend tend to to disparage disparage all the the “old big things” things” that have preced preceded ed it, and promote the “new big thing” as simply the best.
3.
Te next next step step is to make make the the “new “new big thing thing”” very simple so the the decision decision makers makers can understand it, the message being that it is not complicated and can be easily implemented.
4.
Finally, the Finally, the promoters promoters (vend (vendors ors in parti particular cular)) market market their their existin existingg products products and and service service offerings with this new label (in this case BPM) even i the offerings do not meet the generally accepted definitions o the label. Tis leads to there being almost as many definitions o the label as there are vendors.
In this case, the new label has been “BPM” and the same problems have emerged. I you examine the historical context o the BPM “next big thing,” there is a common thread: it is all about business processes and trying to make them better. Vendors and consultants all latch onto new ideas, which are oten extremely good, and hype them up until the idea matures and is able to be used or implemented in a sustainable way.
12
HOW CAN WE DEMYSTIFY BPM? While it is true that BPM has lasted longer than we expected as a term, we think it has matured over the last decade and there has been a growing acceptance that BPM is really a management philosophy promoting the management o an organization’s business processes.
BPM HYPE CYCLE he BPM hype cycle in Figure 2.2 shows a summarized view o how the process cycle has progressed over the last two decades.
Hype Growing acceptance and executive maturity and understanding BPM Movement
Michael Hammer & Champy HBR “Don’t Automate Obliterate” Six Sigma
1986
Maturing technology solutions
BPM Movement Smith & Fingar BPM Third Wave published
1995
2000
2005
2012
Time
Figure 2.2 BPM hype cycle
Six Sigma was invented in 1986, and created an awareness o “processes.” his was ollowed in July 1990 by Hammer and Champy’s (1990) Harvard Business Review article “Don’t automate, obliterate,” and the business process reengineering (BPR) movement started. While BPM has been around or some time, BPM: The Third Wave (Smith and Fingar, 2002) created signiicant interest and discussion; and it could now be argued that BPM is the most important topic on the management agenda. BPM is now broadly accepted in business and while the level o understanding is good, there is still conusion o what it exactly is and how to go about it, especially at an organization level. echnology has also signiicantly matured and is getting better by the day.
WH W HAT IS MYSTIFYING ABOUT BPM? BPM is advocated by its proponents as being dierent rom and better than what has been available in the past. he major advantages promoted are outlined in able 2.1, as are our comments supporting or reuting them.
13
FREQUENTLY ASKED QUESTIONS
Table 2.1 Promotion v. reality BPM major “mystifying” points versus reality
1
BPM is better than the past options for process improvement BPM has certainly raised the visibility of process improvement for many organizations. BPM has also focused many academics and consultants back onto processes and several organizations have been created solely to focus on process. BPM is also
now taughtininthe many universities aroundbusiness the world educatingThis current and future managers benefits of managing processes. is definitely a good thing, as the discussion on standards and BPM in general continues to raise its profile and maturity in the marketplace. Learning from past experience, such as BPR, has also been taken into consideration. The key point is that BPM is only as good as the buy-in you get from the organization and senior management and then how well it is implemented. 2
BPM uses new and better technology There is growing evidence that this is true. There are a growing number of fully automated enterprise-wide BPM implementations. In our experience, technology should not be the initial focus of a BPM activity. The initial work should relate to reviewing the current processes with a goal of increased efficiency and effectiveness (the importance of establishing process goals is discussed later in the book). While
these new improved processes (if appropriate) suggestions automation, significant process could improvements can becontain achieved without theforuse of technology. While technology has improved significantly, the implementers of BPM must ensure it is meeting the needs of the organization. 3
There is a robust methodology to support BPM There are only a very small number of complete and proven methodologies for the implementation of complex BPM programs. Be careful: a methodology or framework can be a millstone as much as a savior, it is how you use it that matters . While you may think your organization is unique, it is doubtful that you are. Do not start your BPM program by developing your own methodology. It is a waste of time and valuable resources; use an existing methodology, learn and then, if necessary, tailor to your organizational needs over time. Remember, you will be evaluated on the business results and not on the methodology.
4
BPM is simple (and, in fact, often oversimplified) BPM is anything but simple. There are many components and elements to a BPM implementation, and one of the purposes of this book is to explain this in more detail. While each of these components might look simple, it is the way they relate, interact and are implemented that is the challenge. You do not need to solve all the organization’s process problems in one go with BPM. Start small, with one project, learn and get executive buy-in. As the organization matures, BPM can be expanded. We will look at the various ways to start a BPM program of work in Chapter 5.
5
External people are needed to implement BPM This very much depends upon the maturity of the organization and the skill levels and experience within an organization. Certainly external consultants can assist either in the establishment phases, or acting in a coaching or consulting role if the organizational maturity and/or skill levels are not sufficient. An experienced external BPM
program/project manager can provide significant focus that, sometimes, internal project managers are unable to bring to a project .
14
HOW CAN WE DEMYSTIFY BPM?
BPM INSIGHT BPM is not a simple concept nor is it simple to implement—it is extremely complex and difficult; and yet, absolutely achievable when approached in the right way.
While the introduction o technology can be a useul contributor or many organizations, BPM does not always need technology to be successul. It is ar more important to get your processes right before you consider the implementation o technology. However, there is no question, with the correct approach and timing to the implementation o BPM technology, it can be extremely successul and beneicial to an organization.
THE ICEBERG SYNDROME Icebergs typically only show about 10 percent o their mass above the water. BPM is oten like an iceberg; people and organizations only see what is above the water. he interesting observation is that what appears above the surace depends upon the viewer’s perception. For example, a vendor sees technology above the surace; a process analyst sees the processes; human resources sees change management and people; I sees the technology impleimple mentation; business management sees short-term gains (quick wins), cost reductions and simple measures o improvement; and the project manager sees short-term completion o project tasks and the deliverables o the project. People oten see the “perception” component as the completion process models, whereas “reality” is addressed in the implementation o these processes and the achievement o business beneits. An excellent strategy is o no use unless it is well executed.
KEY POINT Execution is important, in fact critical: You will achieve more from an average strategy that is executed well; than from an excellent strategy that is executed in an average way. Unortunately, a BPM implementation is a multiaceted activity, and Figure 2.3 shows that “reality” is what appears below the water line. Unless all the “reality” associated with a BPM implementation is addressed, the risk to the project increases. his needs not only to be addressed, but also made visible to the organization. A ship could cruise very close to an iceberg on one side and not hit anything, and yet do the same on the other side and sink.
We will now briely explore one o these “realities.”
15
FREQUENTLY ASKED QUESTIONS
Perception
Reality
Figure 2.3 Perception, the tip of the iceberg called “reality”
BPM INSIGHT The visibility of issues and activities is an important part of addressing them, as is the establishment of the foundations necessary to commence a BPM program of work and have the program a success.
EXPLORING “REALITY” he most important component in any BPM implementation is the management o organizational change and the associated people (sta) impacts. As mentioned earlier, the implementation and its success are owned by the people in the trenches. People and their engagement in the implementation are critical, and a holistic approach in meeting the people and cultural aspects o managing an organization is crucial.
BPM INSIGHT In fact, in our experience the people change management or organization change management manage ment aspects are 60 percent plus of any BPM program effort.
he key to engaging the people in the trenches is leadership. Leadership rom the CEO or senior executives o the BPM program and rom their line managers or BPM projects. he leaders must be engaged irst. he program director, project manager or project team cannot achieve people engagement on their own.
16
HOW CAN WE DEMYSTIFY BPM?
KEY POINT The level of success of any BPM initiative is limited by the level of commitment and drive from executive management. It is the people who will determine the success (or otherwise) o your BPM activities. You can have the most eective and eicient new or redesigned processes in the world, but unless you can convince people to use them eiciently, or at all, then you have nothing (reer to Chapter 8). People need to be included as an integral part o the development journey. hey need to be consulted, listened to, trained and communicated with on a regular basis. I they do not understand the processes, the reasons or the new processes and why changes to the existing processes are necessary, how do you expect people to take ownership and responsibility or them? People need to understand clearly what is expected o them and how they it into the new structure and processes. heir perormance measures need to be developed in consultation and agreement with them. What is the role o management in the transormation? While it may seem obvious that managers need to manage the operation o the organization, this is in act not not what what most managers do in their current positions.
KEY POINT In our experience, with rare exceptions, today’s managers spend most of their time reacting to critical situations and treating the symptoms and not the causes—commonly referred to as “crisis management.”
his is not to be critical o managers. In general they are well-meaning well-meaning and hard-working hard-working individuals who generally do a great job with the tools they have to work with. here needs to be a considerable eort in i n any BPM activity to work with the management and determine what inormation managers require to manage the business. business. You need to ensure that there is a deep and thorough understanding o how the business operates; what inormation is required, and how to provide it in a timely manner, to enable managers to move rom reactive to proactive management and then to predictive management. It is this journey o management maturity that provides the organization with a long-term continuous and sustainable increase in productivity.
17
FREQUENTLY ASKED QUESTIONS
CHANGE MANAGEMENT AND PERFORMANCE MANAGEMENT he people change management components o programs/projects need to address the organizational culture and modiy it towards a new set o management behaviors that will translate into the behaviors o the people they manage. o support the drive to implement cultural change, management incentives need to be aligned with the management inormation available, the process goals and organizational strategy. Incentives and targets via perormance management need to be well known and realistic. hey must also allow the best perormers perormers to overachieve, and the rewards need to be worthwhile. his does not always translate as money incentives; human resource departments can be very creative in providing non-monetary options. he challenge is how to measure and manage this change in an eective and acceptable way.
KEY POINT Most BPM activities just focus on making people able to use the new processes, through training and one-way communication. Change management is about people wanting to use the new processes and requires early, frequent and interactive two-way engagement.
In these irst two chapters a deinition and metaphor o BPM has been provided, as well as some o the history, mystery and complexities o BPM. Chapter 28 provides three detailed case studies o BPM. he results o one o these case studies (a bank) is outlined here to demonstrate that BPM can not only be implemented, but be extremely successul. A second case study has also been provided.
This organization was a large bank, and in the first 3.5 years of its BPM program the results have been nothing short of spectacular. The Consumer division of the Bank:
Y • reduc reduced ed their expenses expenses ratio ratio by 50 percent; percent; D • increased the customer customer facing time within its 300 branches branches to more than than 70 percent. Note: Note: U a reputable consultancy completed an industry review that determined that branch staff T spent 17 percent of their time with customers. With the removal of the majority of the back S office processing, the bank branch staff are now spending more than 70 percent of their E time with customers; significantly, from 25–30 percent to 3–5 percent, which is considered an S • reduced errors significantly, A acceptable level; customer satisfaction increased significantly, significantly, as measured measured by surveys. surveys. C • staff and customer
18
HOW CAN WE DEMYSTIFY BPM?
A more detailed case study of what can be achieved with BPM and how to achieve it.
Background This was a small business unit of a much larger bank, insurance and wealth management organization. The business unit had in excess of 100 full-time equivalent (FTE) staff and an annual operating budget of $10m. The business unit develops financial products and sells them via a network of independent intermediaries (financial advisors, banks, building societies and so forth). It develops and markets for the superannuation or pension fund marketplace. Two business units were joined together following an acquisition. Historically, the main business unit was always client focused. Staff were able to process any request from members or advisors within the one geographic region. The newly acquired business unit was functionally based—that is, a staff member would only process one type of transaction but would do so for every client and advisor regardless of their location. These two business units were left that way under the one management structure until it was decided to merge them under the one client-focused structure. It was fully understood by management that there would be a significant training exercise required to achieve this new client-focused approach. So customer-focused training was delivered to provide staff with the necessary skills. The business was structured on a geographical regional basis and all work coming into the organization was segregated by region and then processed. Staff had the dual responsibility for processing the transaction and liaising with customers. Management believed that the additional costs associated with this approach would be outweighed by the benefits of increased job satisfaction for staff, greater accountability and better customer satisfaction.
Business challenge One of the prime goals of this new approach was to improve customer service within six months; this was not achieved, despite extensive on-the-job and formal customer service training. This was further compounded by an unacceptably high expense ratio, work duplication, increasing error rates and service standards not being achieved. The fact that the two original business units were still being administered on different system application platforms (legacy applications) did not help the situation. It required everyone to be fully familiar with both systems. So a decision had been made to rationalize onto one platform but that was still likely to be several years away. The customer service in the original business unit, which was originally rated as very Y D good, began to fade. The customer service in the newly acquired business unit, which was U rated below average before the amalgamation, failed to improve.
T Approach oach S Appr
E The overall business unit decided to approach three service providers in the area of business S process management to provide proposals of how to remedy the situation. They did not include A the incumbent software workflow vendor in the short list as previous experience indicated that C the vendor concentrated solely on the workflow software whereas the business unit wanted
19
FREQUENTLY ASKED QUESTIONS
to review the processes from an end-to-end perspective and then review and understand the business implications. The management was fully committed to the success of this review project and demonstrated this by the level of management time allocated to the project. The business unit manager and his three client service managers allocated two days a week to the project for the project duration. Other staff, including team leaders and senior fund administrators, were also involved in workshops, reviewing outcomes and revising estimates—a commitment of six staff from the overall business unit of 100+ for about 20 percent of their time over the project. The selected BPM consultancy recommended a phased approach with several “gates” to allow the business to stop at any stage, ensure it was receiving value for money and that the project was delivering as expected. There were four phases recommended, with the expected duration indicated below: Approach (phases): • • • •
Discovery Discov ery (2 (2 weeks) weeks) Current Curre nt state state analysis analysis (< (< 5 weeks) weeks) Futuree state Futur state analysis analysis (~ 6 weeks) Final Fin al report report (2 (2 weeks). weeks).
These phases were delivered by the BPM consultancy with a lead consultant and one senior consultant for the duration of the engagement. The consultants: • met with with key key stakeho stakeholders lders • conducted workshops workshops (process execution staff and management) • ensured that all necessary stakeholders who were external external to the main business business unit were fully engaged. This included the finance department and IT • model modeled ed the current processes processes and the proposed proposed new processes processes • compl completed eted significan significantt metrics metrics analysis. analysis. At the conclusion of each phase the client received a report that provided an opportunity to evaluate the phase and stop or redirect the project if necessary. The timeframes indicated were met and there was no project overrun from a time or budgetary perspective. The small project team engaged the staff and management significantly in the project. An early engagement was considered an essential part of the human change management aspects of the project and necessary to achieve the results the business needed.
Y Project findings D The Discovery and Current state analysis phases revealed a number of significant pieces of U information: T • there were 12 quick win opportuniti opportunities es identified and the the business commenced commenced implementing implementing S six of these immediately E • there were 20 primary primary business processes, which represented 95 percent percent plus of the S business operational costs, the other processes were considered to be of no great A consequence in the context of this project four processes accounted accounted for 65 percent of of the operational operational costs C • the top four
20
HOW CAN WE DEMYSTIFY BPM?
spent on enquiries enquiries and complaints complaints Y • a further 23 percent of costs were spent transactions processed was considered necessary D • checking (to ensure no errors) of the transactions U because of the exceedingly high error rates and these checking activities accounted for 17.5 percent of staff time. T S This provided an indication of where to expend effort in the Future state analysis phase.
E S Results A At the conclusion of the Future state analysis phase the savings indicated a conservative cost C saving of 39 percent, with an 83 percent staff utilization factor.
CONCLUSION Many people are still conused about what constitutes BPM, which is not surprising when the BPM community itsel has not yet agreed on a common deinition and approach. BPM is all about the eicient and eective management o business processes—people are at the center o business processes, so make them part o the solution.
KEY POINT We had improvement programs, but the real difference came when we decided it was no longer a program, it was a business strategy. (Stephen Schwartz, IBM)
BPM INSIGHT
Without trivializing the work involved in the implementation, implem entation, the project is the easy part. It is the institutionalization of process improvement and management as a fundamental management practice that is the key, and this cannot be effectively achieved without the ability to manage your processes proactively and predictively.
SUMMARY While BPM may appear a mystery, there are several ways to unravel it: • BPM had its origins origins in the coalescing coalescing of quality thinking, thinking, process process thinking thinking and the evolution of technology.
21
FREQUENTLY ASKED QUESTIONS
• We discusse discussed d the concept concept of where where the the “next big big things” things” come from. from. • BPM is now now broadly broadly accepted accepted in busin business ess and and while the the level level of understanding is good, there is still confusion of what it exactly is and how to go about it, especially at an organization level. Technology has also significantly matured and is getting better by the day. • The Iceberg Iceberg Syndrome Syndrome is is a metaphor metaphor for the the complexit complexityy of BPM. What What appears above the water is only a small part of any BPM implementation program and will depend upon the viewer’s perspective. • BPM is not a simple simple concept concept nor nor is it simple simple to implement implement—it —it is extremel extremelyy complex and difficult; and yet, absolutely achievable when approached in the right way. • The visibility visibility of issues and activities is an important part of addressing them, as is the establishment of the foundations necessary to commence a BPM program of work and have the program be a success. • The people people change change management management or organiza organization tion change change manageme management nt aspects of BPM are 60 percent plus of the implementation effort. • Manageme Management nt focus focus on “crisis “crisis managemen management” t” needs needs to be refocused refocused to the the causes of issues and not treating the symptoms.
SELF-TEST 1 Where did BPM have its origins? 2 How does mystification begin? 3 List the five mystification factors and their relationship to “reality”? 4 In the Iceberg Syndrome, what are the six different viewers’ perspectives that appear above the waterline? 5 Why is people change management important and how much effort should a BPM program expend on it?
22
CHAPTER 3
WH W HO SHOULD BE INVOLVED W WH H AT A R E TIN H EBPM C R I TAND I C A L SUCCESS FACTORS? OVERVIEW Once we have a common understanding of what is meant by “involve” and “the type of BPM activity,” there are proven answers to the question of who should be involved in BPM. Successful BPM implementations have clearly shown who needs to drive BPM and identified the critical success factors. We will examine these in this chapter.
OVERALL LEARNING OUTCOME By the end of this chapter you will be able to: • Have a clear clear underst understandi anding ng of who who should should be invo involved lved in in the variou variouss types of BPM activities • Iden Identif tifyy the two aspect aspectss of operatio operational nal managem management ent of busine business ss processes • Unde Understan rstand d when when exter external nal BPM BPM expert expertss can add value • Ide Identi ntify fy some some of the the criti critical cal succ success ess fact factors ors • Hav Havee an under understa standi nding ng of a metaph metaphor or for for BPM. BPM.
Beore we deal with who should be involved in BPM there are two things we need to deine. First, what we mean by “involved”; and second, “what type o BPM activity” are you dealing with. “Involved,” in this instance, includes such diverse aspects as driving BPM, establishing the business activities, detailed process reviews, process modeling, process redesign or
23
FREQUENTLY ASKED QUESTIONS
Table 3.1 BPM activities and the type of involvement Type of BPM activity
Typical leaders
Role
Simple lo Sim low w im imp pac actt BPM project
Sponso Spon sor: r: bus usiine ness ss un unitit le lea ader Manager: Project Manager
• Del eliive verr to the bus usiine ness ss case • Manage the project effectively
High impa impact ct BPM project
Sponsor: Divi Sponsor: Divisiona sionall Lead Leader; er; Senior Executive
• Deliver Deliver to the busin business ess case • Manage the project effectively
Manager: Project Director
• Easpects nsure thofatthe theproject organizare atioeffectively nal change managed
Large-scalee BPM Large-scal program
Sponsor: CEO or anoth Sponsor: another er very senior executive Manager: Program Director
• Personal Personal invo involvem lvement ent (not just turnin turning g up to steering committee meetings once a month) • Publ Publicly icly alig aligning ning progr program am and indi individu vidual al projects with the organization strategy • Com Commun munica icatio tions— ns—for formal mal and inform informal al to all stakeholders • “Wa Walk lk th thee ta talk lk””
Enterprise-wide business transformation
Sponsor: CEO Manager: Transformation
• Personal involvement (not just turning up to steering committee meetings once a
program
Psenio rogrram Diretive) cto)r (usually a senior executive execu
onicly th) alig • m Publicly Publ aligning ning progr program am and indi individu vidual al projects with the organization strategy, especially to external stakeholders • Comm Communica unications tions—form —formal al and info informal rmal to all stakeholders • “Wa Walk lk th thee ta talk lk””
innovation, metrics analysis, BPM implementation, ongoing management and improvement and organizational change management. It could also involve customers, suppliers, suppliers o suppliers, and many other stakeholders. Second, the “type o BPM activity” could range rom a simple small low impact BPM project to improve a process(es); to high impact projects; large-scale BPM programs; and even enterprise-wide business transormation programs being predominantly driven rom a process-ocus perspective. perspective. able 3.1 outlines these types o activities together with the leaders who would typically drive the activity and an indication o the role they may ulill. he irst two types o BPM activities shown in able 3.1 are oten initiated or driven rom the bottom-up as they are typically projects. Even i a BPM project has a large impact upon a business unit it is oten initiated by a knowledgeable and passionate process-ocused manager or executive. It most probably will not have signiicant attention rom the Chie Executive Oicer (CEO). Whereas the last two, program and transormation, activities shown in able 3.1 will typically be top-down driven as they cannot be initiated or successul without the drive and detailed support o the CEO. Even i driven or sponsored by another senior executive, the success will depend upon the continued support o the CEO. Reer to Chapter 5 or more detail on bottom-up and top-down approaches and why one will never (or rarely) work or an enterprise-wide BPM implementation.
24
WHO SHOULD BE INVOLVED AND SUCCESS FACTORS?
BPM INSIGHT It must be remembered that processes are not a goal in themselves. They are simply a means to achieve a business objective.
Processes will not achieve a business objective automatically or by chance; they need continuous and eective management.
KEY POINT Process management is the management and organization of processes crucial for your business. Processes need to be as eicient and eective as possible. his can be achieved by periodic projects (step improvements) or larger scale projects to signiicantly reinvigorate them by introducing innovation. Either way processes can only be sustained by ongoing management and measurement.
MANAGEMENT OF BUSINESS PROCESSES We would suggest that there are two aspects to operational operatio nal management o business processes: 1.
Manage Man agemen mentt o busines businesss process processes es as an integr integral al part part o “manag “manageme ement. nt.””
2.
Manage Man agemen mentt o busi busines nesss pro proces cesss imp improve rovemen ment. t.
Who is involved will vary depending upon which aspect you are addressing.
Management of business processes as an integral part of “management”
his aspect o management is responsible or the realization o the business objectives and ensuring the business processes are linked and contributing to the organization strategy. his management o business processes should be perormed by line management (in conjunction with process governance—business process owners/stewards), and cannot be delegated to internal or external BPM consultants, as this role orms an integral part o “managementas-usual.” For example, senior managers should be responsible or the end-to-end processes, while middle management should be responsible or the individual process(es) that comprises the end-to-end process or parts o the process. It is crucial or line managers that they take responsibility as the owners o these processes.1 ypical process ownership related responsibilities include:
25
FREQUENTLY ASKED QUESTIONS •
speciyin speci yingg objecti objectives ves (goal (goals) s) and and measures measures that that rela relate te to the the object objective ivess and targe targets ts to be achieved—these targets should be broken down into daily or weekly measures to enable continuous monitoring and management;
•
communica commun icatin tingg the obje objecti ctives ves,, measure measuress and targ targets ets to to the peop people le execu executin tingg the processes and, i necessary, providing rewards and incentives;
•
monito mon itorin ringg and manag managing ing progr progress ess o the the targe targets, ts, and and veriy veriying ing whet whether her the the objec objectiv tives es
•
and measures are still accurate and relevant; motiva mot ivatin tingg staff staff to to exceed exceed obje objecti ctives ves and and deal deal with with pro proces cesss distur disturban bances ces;;
•
encour enc ouragi aging ng staff staff to iden identi tiyy bottle bottlenec necks ks and and possib possible le proce process ss impro improvem vement ents. s.
hese line managers can be classiied according to their main scope o activities: •
Operation Operat ional al manag managers ers shou should ld be worki working ng with with clearl clearlyy defined defined proc process esses es and and related related objectives. Teir main involvement in the processes are to adjust the resourcing o the people aspect o the process(es) (or example, more or less staff) and solve operational problems (or example, errors as a result o the processes).
•
actic ac tical al mana manager gerss will will be be lookin lookingg at imp improve rovemen ments ts o o the the proce processe sses. s.
•
Strate Str ategic gic mana manager gerss will will be lookin lookingg at the the busine business ss model model and and the the relate related d proces processes ses..
Management of business process improvement his role relates to the identiication, development, implementation and roll-out o the beneits o BPM. hese managers are responsible or supporting the business/organizational managers in improving their processes, and they should not be responsible or the day-today management o the business processes. We call these these managers BPM managers, and distinguish between the ollowing types: •
Te BPM BPM projec projectt manage manager, r, whose whose main main respo responsi nsibil bility ity is is to ensur ensuree that that the obje objecti ctives ves o the BPM project, as outlined in the business case, are being met.
•
Te BPM BPM progr program am manag manager, er, whos whosee main res respon ponsib sibilit ilityy is to aci acilit litate ate mult multipl iplee BPM projects so they meet the program’s objectives and, a nd, by sharing best practices and lessons learned, to do it in the most effective and efficient way.
•
Te manag manager er o the the Cente Centerr o Busine Business ss Proce Process ss Excel Excellen lence, ce, whos whosee main main respon responsib sibilit ility y is to ensure that the business and processes are aligned to ensure that the maximum benefits are obtained rom the business processes.
•
Te chie chie proces processs officer, officer, whos whosee main main respon responsib sibili ility ty is to to ensure ensure that that the the proce processe ssess and I are aligned with the strategy, business and organization, and that this initiative is continuously managed rom the executive level o the organization.
In any activity, be it a project, program or business transormation, it is critical that the employees are heavily involved in all aspects.
26
WHO SHOULD BE INVOLVED AND SUCCESS FACTORS?
BPM INSIGHT In our experience in consulting to and implementing BPM programs/projects all around the world, there is one constant—the people organizational change aspect is 60 percent plus of the effort in all BPM activities. Unless you ensure involvement, transparency and visibility for the people, chances are you will not optimize success and risk outright failure.
Close to the business All the various types o BPM managers must understand that their role is to assist in the achievement o targets established by the line managers/process owners/process stewards, and not to build a BPM empire. he people working with or reporting to the BPM managers should ideally be sourced rom the business units involved with the project, as these people will provide the opportunity or a “closeness” to the business and an understanding o the business processes that cannot be obtained rom non-business people. Designing processes on paper is easy, but to be relevant and able to keep on executing them as things change is a challenge and will remain a challenge long ater the project is complete. he most important criterion or success is not not to to have the best “looking” process models or solution, or the most sophisticated process modeling and management tools.
KEY POINT The most important criterion for success is that the organization actually uses the BPM solution and that the desired results are being achieved or exceeded. On average, about 80 percent o a business line manager’s time should be spent on business-as-usual activities, such as reviewing results, coaching and solving problems, and only about 20 percent on new process development or business initiatives. On the other hand, BPM managers will spend in excess o 80 percent o their time on process improvement activities. (Note: these percentages can o course vary rom time to time and situation to situation.) his dierence o ocus between the two roles is a reason or tension between the line manager and the BPM manager: the line manager ocuses on achieving the short-term target, and any change can aect his or her ability to do this, in the short term. he BPM manager ocuses on change necessary to achieve the long-term objectives. Successul managers are those able to agree a win–win solution.
USE OF EXTERNAL BPM EXPERTS By its very nature—namely, managing people and processes—it is recommended, in the long term, that it is always internal personnel who ulill the management roles discussed above,
27
FREQUENTLY ASKED QUESTIONS to ensure continuity and acceptance. In the initial phases o an organization’s BPM maturity m aturity and its irst ew projects, it will be appropriate or the organization to appoint external BPM experts and BPM project managers to assist in bringing BPM experience and knowledge transer to the internal sta. Ater the initial projects, and as the organization process maturity grows, external support or the managers can take on a dierent set o responsibilities, such as: •
Setting up a project, program or Center of Business Process Excellence Excellence.. External consultants can leverage their experience rom multiple organizations and provide guidance. Tis can be o particular assistance in ensuring that the scope o the activities is not too ambitious or has ambitions that are too small. Te activities should start pragmatically. Having no ambition will lead to no undamental change, while the lack o a pragmatic approach leads to the inability to meet expectations or maintain the initial effort.
•
Monitoring the progress of a project, program or Center of Business Process Excellence Excellence.. An external consultant has the ability and independence to ask tough questions. Ofen internal people become engrossed in the details o process models and the structure o the project, program or Center o Business Process Excellence, and can lose sight o the overall objective.
•
Monitoring the performance of the business and identifying areas for improvement . Te external consultant can periodically review the perormance pero rmance o the business unit and staff. Tese reviews can then be discussed with the line manager or any necessary corrective action.
•
Conict resolution and project/program revival . Te external consultant can assist the organization i the original project/program or Center o Business Process Excellence does not deliver the agreed results. Te first step is to identiy the core problem(s) and determine whether the original objectives can still be met; the necessary steps can then be taken. An external consultant can unction as an icebreaker.
•
Support for the manager . Te external consultant can assist the BPM manager i he or she is overburdened with work—which can ofen occur with large organizational changes. Te external consultant becomes an advisor to the BPM manager. Te BPM manager should still be responsible or stakeholder management and decision making, and the consultant can assist in analyzing and overseeing the various activities under responsibility o the BPM manager.
•
Evaluating (or quality assuring) project(s) and program(s). program(s) . During and at the conclusion o a project or program it is crucial that the results are evaluated; this will assist with ormulating lessons learned or the next initiatives and may also assist in evaluating and
BPM INSIGHT BPM projects/programs can be extremely complex, and there is a growing trend towards providing internal business project managers and BPM managers with a BPM coach.
28
WHO SHOULD BE INVOLVED AND SUCCESS FACTORS? identiying outstanding key issues that have not yet been addressed within the project. In these situations, an external consultant can ask unpopular questions. he coaching role is typically illed by a senior BPM consultant (internal or external), who will coach a BPM manager/project manager on a requent basis about the main challenges and how to deal with them. his can also be appropriate or business line managers who want to introduce process thinking among the employees to achieve sustainable improvements. Most o these coaching engagements commence with a project or workshop, ollowed by the ongoing coaching sessions.
CRITICAL SUCCESS FACTORS he reality reality o o implementing a BPM solution is ar more complex than it irst appears to be. A BPM project/program has the potential to (and usually does) cut across departments and, increasingly, organization boundaries, as clients, vendors and partners become more involved. It will involve many varying and complex stakeholder relationships both inside and outside the organization. While each project will be unique and have its own characteristic success actors there are a small number o critical success actors that we believe are common across all organizations and BPM, as shown in able 3.2.
KEY POINT If you do not have the first critical success factor, support of the CEO or senior executive team, then you should simply stop. The other critical success factors (2 to 6) will be irrelevant without this dedicated and unambiguous support of the senior leadership team.
o support the view that large-scale BPM programs or enterprise-wide process-ocused (BPM) transormation programs need to be driven by the CEO or senior executive team review able 3.3 and observe at what level within the organization the BPM programs were driven. here are a number o other considerations and comments to make in support to these success actors. We have created a list below that you should take into account: •
Leadership—it has been suggested that unless you have the undivided and total support Leadership—it o the CEO, you should not attempt any BPM projects. Te reality is that ew CEOs are yet at the point o turning their organizations into totally process-ocused businesses. While there is undeniably a growing awareness o the importance o processes to organizations, there is still a long way to go. As we will discuss later, leadership does not always equate to the CEO; there are many leaders within an organization, some o whom are experimenting with BPM projects. Leadership in this context means having the attention, support, funding, commitment and time o the leader involved in the BPM project. Obviously, the degree o each o these will vary according to the BPM maturity
29
FREQUENTLY ASKED QUESTIONS
Table 3.2 BPM critical success factors 1
Critical success factor
Description
Driven by by se senior le leadership
As sh shown in in Ta Table 3. 3.1, ifif yo you ar are pl planning to to ex execute a BPM program of work or enterprise-wide business transformation program then you must have the demonstrable support of the CEO and senior executives. This is the single most important critical success factor for these types of BPM activities. If you do not und unders erstan tand d wha whatt is dri drivin ving g you to do BPM the thenn stop doing it until you do. You may be solving the wrong problem!
2
Clearlyy und Clearl underst erstood ood business drivers
3
Clearly un underst stoood pr project/ progra pro gram/t m/tran ransfo sforma rmatio tionn visi vision on —what will the business look like afterwards?
Visi sioon in in th this in inst sta ance is is muc muchh mo more th than th the tra trad ditional pro projject “scope “sc ope”” stat stateme ement. nt. The sco scope pe of a BPM BPM pro projec jectt is is alwa always ys di diffic fficult ult to specify early in the project. It does get easier later in a project. BPM program and transformation scopes are near impossible to clearly articulate (in the project scope sense). It is more about agreeing what the business will look like after you have been successful. If you do not “start with the end in mind” (the vision) how do you know you are heading in the right direction? Chapter 13, Foundations phase, will discuss this in more detail.
4
Clearlyy und Clearl underst erstood ood,, agr agreed eed and measurable business value outcomes—how will the business be better off afterwards?
You nee need d to cle clearl arlyy und unders erstan tand d whe whenn you ha have ve bee beenn suc succes cessfu sful.l. This requires measures of success. If you can’t measure your success, then how do you know you have been successful?
5
Appointed Appoin ted an and d emp empowe owered red BPM leader and team
This is esp This especi eciall allyy cri critic tical al for BPM pro progra grams ms an and d tra transf nsform ormati ations ons.. Empowered implies having the authority, experience and backing of the CEO and senior executive team.
6
Senior exe Senior execut cutive ives, s, man manage agers rs and other appropriate people need to be provided with the right incentives and disincentives
People pro People probab bably ly wil willl nee need d to be mot motiva ivated ted vi via a Key Per Perfor forma mance nce Indicators (KPIs) and rewards. The rewards may be financial, non-financial, promotions, etc. HR departments can be quite creative. There also need to be disincentives for non-performance.
o the organization and leader. Time is critical to the project, and does not mean that the leader “turns up” to project steering committee meetings once a month. Te time commitment will involve the leader supporting the project amongst colleagues, stakeholders, customers, suppliers and the people within the organization. Te leader is the “head sales person” or BPM, and will need to continually “sell” the expected benefits and outcomes and “walk the talk” o BPM. •
A structured approach to BPM implementation implementation—without —without an agreed structured and systematic approach to the implementation o BPM projects/programs that takes into account thethe organization strategy,ahow it is towill be executed andand the have significant aspects o implementation, project be chaotic very behavioral high risks associated with it.
30
WHO SHOULD BE INVOLVED AND SUCCESS FACTORS?
Table 3.3 Successful BPM organizations and who drove BPM Organization name
BPM “driver”
Business benefits
Citibank, Germany
Chief Operating Officer (COO)) and Board (COO member
• 50+% reduction in opera ratting costs • Incr Increased eased bran branch ch custom customer er faci facing ng time time:: from 17% to 70+% • Erro Errorr rates rates down down from from 25–3 25–30% 0% to to 3–5% 3–5%
Air Produ Products, cts, globa globall organization
Chief Execu Chief Executive tive Offic Officer er (CEO)
Nedb Ne dban ank, k, So Sout uthh Af Afri rica ca
COO an COO and d Ch Chie ieff Informati Infor mation on Offic Officer er (CIO (CIO)) (same role)
• Larg Largee op oper erat atio iona nall sa savi ving ngss • Orga Organiza nizationa tionall unde understan rstanding ding of time, cost, quality, risk for processes • In Incr crea ease sed d BPM BPM matu maturi rity ty
Aveant Home Care, The Netherlands
CEO
• 50% reduction in administration staff levels • Significant improvement in operational work rates • Sig Signifi nifica cant nt reduc reductio tionn in error error rates rates
• Increased Increased custom customer er and staff satis satisfact faction ion • 32% increased increased opera operating ting return on net asset assetss
BPM INSIGHT BPM projects that are executed using only traditional project management methodologies will yield sub-optimal outcomes. The 7FE Framework Fr amework described in this book provides the required systematic and structured structure d approach that will significantly increase the likelihood of success and minimize risk.
•
People change management —processes —processes are executed either by people, or by people supported by technology. It is people who will make or break the implementation o a BPM project, and unless they are “on board” and supporting the project, the chances o ailure are high. Human organizational change management on a BPM project/program, in our experience, can take upwards o 60 percent plus o project time, tasks and effort. How ofen do you hear it said that “people are our greatest assets”? Yet most organizations spend less than 1 percent o project budgets on the people aspects o the project. Tis is simply not enough in any project, and with the increased impact upon people o processes, this percentage must increase substantially. Te project team needs to spend a great deal o time and effort on human change management. Te people aspects o every process change and activity need to be assessed and acted upon in an understanding and sympathetic manner.
•
Sustainable performance—a performance—a project has a defined period o lie, whereas processes, i maintained, supported, measured and managed, will continue to exist in a business-asusual environment ar beyond the lie o the project. It is a project’s task to hand over processes in such a way that the business understands how to “look afer” them.
