The Business Value of BPMMichael zur Muehlen, Ph.D.Center of Excellence in Business Process InnovationHowe School of Technology ManagementStevens Institute of TechnologyHoboken NJMichael.zurMuehlen@stevens.edu

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BPM: The Business Value Question

BPM, BAM, BI, ESB, SOA, BLI, BLA,

BLUBB...

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Relationship

between

BPM

and

Strategy

FINANCIAL

PROCESS

LEARNING & GROWTH

CUSTOMER

Value Proposition

Operations Customer InnovationRegulatory /

Social

ChangeAgenda

Strategic IT

Strategic Job

Families

InformationCapital

HumanCapital

OrganizationCapital

Primary Objectives

Processes

Enable Value

Creation

Financial

Objectives are

Paramount

Processes

shapes and are

shaped by

organizational

maturity

Customers

Seek Value

and Pay for it

What is BPM?

Business Process Management is the collection of

methods and tools that allow us to answer questions

such as:

What are our processes?

How do we ensure their performance?

How do we maintain their compliance?

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Let’s start with the process definition:

A Business Process is the temporal and logical sequence

of those activities that are necessary to manipulate an

economically relevant object toward an overarching goal,

creating value for a customer

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MotivationDrivers for

Business Process Management (BPM)

Performance

Business Process ImprovementEngineering of Process-aware IS

Compliance

Mandated compliance (e.g. SOX)

Desired compliance (e.g. ISO, ITIL)

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You’re Hired

Process: New Hire Integration

Background Check

Allocation of office space

Reservation of phone, pager

Creation of access rights in operational systems

Problem: Lost productivity due to late provisioning of work

infrastructure

Automating the process coordination reduced cycle time

from 2 week average to 2 days

BPM Goal: Performance

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You’re Fired

Process: Employee Termination

Removal of computer access rights

Collection of company-issued phone, pager, access card

Removal from employee directory

Problem: Not all equipment is collected, access rights

remain after an employee leaves

Automating the process coordination ensures that no step

is forgotten

BPM Goal: Compliance

crea

tes

enables

Process Change

All IT is Initially an Expense

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Information Technology X

Business Value

How do you make a Cup of Coffee?

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Boil Water

Thirsty

Put Coffee in CupPut Boiling Water

in Cup

Coffee is Ready

Co

ffe

e L

ove

r

The Nescafè Process

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Boil Water

Thirsty

Put Coffee in

Cup

Put Boiling

Water in Cup

Coffee is Ready

Fill Kettle

yes

no

Clean Cup

Yes

No

Kettle

empty?

Cup dirty?

Water is cold

Coffee L

over

Dis

hw

asher

The Espresso Machine Process

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The Starbucks Process

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Order

cancelled

> 5 min wait

Ba

rris

ta

Co

ffe

e S

ho

p

Ca

sh

ier

Ho

use

ho

ld

Thirsty

Collect

Payment

Go To Coffee

ShopOrder Coffee Pay for Coffee Take Coffee

Make CoffeeHand Coffee

To Customer

Payment

Order

cancelled

Insufficient Payment

Coffee

Order

> 5 min wait

+Done

Done

Leave

Discard Coffee

Done

Store Open

Take Order

BPM Questions

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How do we design and communicate this process?

How do we perform this process well?

How do we manage this process well?

How do we maintain compliance to rules and regulations?

How should technology support this process?

Types of BPM Projects

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0 25 50 75 100

75

56

45

36

33

31

24

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Improving Existing Processes

Redesigning a Major Business Process

Enterprise-wide Process Modeling

Measuring Organizational Performance

Process Automation using a BPMS

Delivery of Process Performance Data to Senior Executives

Process Automation using ERP Software

Monitoring Perfomance of Managers

OtherSource: Palmer (2007)

Scheduled Project Time during

First BPM Project

5%

3%

41%

4%

9%

11%

12%

7%

8%

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Business Case

Project Team Selection

Process Discovery

Documentation

Functional and Technical Specification

Tools Evaluation and Selection

Implementation

Testing and Debugging

Deployment and Training

Source: BPTrends (2006)

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Manage Change

Manage Execution

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Managing Risk with BPMS

Use formal Process Models to limit process non-compliance

Process Models can be scripts or maps

If Scripts: Use BPMS to automate control flow, task allocation,

application/service invocation

If Maps: Use collaborative tools to allow execution flexibility

BPMS provide risk management services

Authorizations / Access Control

Enforcement of routings, reviews

Audit capability to document compliance

Managing Risk with BRMS

Use Business Rules to limit contextual non-compliance

Document process objectives to prevent business rules from

turning into process rules

Performance Objectives combine BAM with BRMS

Decision rules allow context-dependent enforcement of

oversight

Use Business Rules Management System to enforce compliance

Document rules limit the state changes on documents

Example: Can’t go from draft to approved without review

Customer rules configure case handling

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NotationStandard

Integration Standards

InteractionStandards

StandardMetrics

AuditStandards

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Thank You – Questions?

Michael zur Muehlen, Ph.D.Howe School of Technology ManagementStevens Institute of TechnologyCastle Point on the HudsonHoboken, NJ 07030Phone: !+1 (201) 216-8293Fax:! +1 (201) 216-5385E-mail:!mzurmuehlen@stevens.eduWeb:! http://www.cebpi.org

Process Thought Leadership