Business Process Design 2008

Business Process
Analysis and Design
Utilizing Toolsets

Business Process Modeling Utilizing Toolsets
Michael Paskevicius © 2008

Agenda
Introduction to process analysis
Introduction to various toolsets
Toolsets for process modeling
Some examples


What are organizations for?
Principles for an Organization

1. The mission of an organization is to create value for its
stakeholders
2. It's a company's processes that create value for its stakeholders
3. Business success comes from superior process performance
4. Superior process performance is achieved by having a superior
process design, the right people to perform it, and the right
environment for them to work in

Source: Michael Hammer, Beyond Re-engineering:- How the Process-Centred Organization is Changing Our Work and Our Lives


The Traditional Organization
Typical Classic / Hierarchical / Typical
Functional Organization Attributes
CEO

Service / Customer Facing /
Back Office / Front Office /
Support Operations
Departments Departments

Finance HR Marketing Sales
Department Department

IS / IT Manufacturing Distribution
Department

Purchasing


The Process Focused Organization
Typical Network / Horizontal / Typical
Process Oriented Organization Attributes


What is a Process?
An organized group of related tasks that together
reliably create stakeholder value
Or
One or more tasks that add value by transforming a
set of inputs into a specified set of outputs (goods or
services) for a customer by a combination of people,
methods, and tools
Or
How Things Gets Done!


Tasks vs. Processes
A task is a business activity performed by one or
several employees regularly and repetitively
In a task-oriented organization, employees may be very efficient in what
they do, but the efficiency may not translate into result.

A process consists of a group of related tasks which
together creates a result or value for the customer
In a process-oriented organization, unnecessary tasks are eliminated,
and the remaining tasks are re-grouped or streamlined to optimize
business objectives, often through the use of information technology.


Process Elements
Effort
Expended by people, machines, etc.
Tasks / Work
Transforms “inputs” into “outputs” incurring a “cost”
Process Structure (Manual)
Organizes tasks to reliably deliver value to stakeholders
Stakeholders
Receive value

Whether they are consciously defined / documented or not processes
exist in all organizations

Core Processes
Strategic weapons
Core processes are “owned” – accountability
Owner has responsibility & authority
Redefines organizational structure
Failure of a core process can critically affect
operation

Stakeholders: people affected by outcome of
process

Value Chain


What is Process Analysis and
Design?
Removal of all work / tasks that don’t contribute
to the value proposition
Analysis – understand / measure the work done today
and whether it adds value
Design – describe and organize a set of tasks that all
contribute directly to the generation of value
Why?
Maximizes an organization’s ability to satisfy the needs of its
stakeholders (customers)
May lead to strategic advantage
Implies changing what and how work is done (this requires
leadership)


What Benefits come from Utilizing
a Business Process Strategy?

Continuous successful strategic management
Continuous change management
Risk Management


Measures
Process
Measures of resources consumed
Output
Ability to deliver product/service according to
specification
Outcome
How well the product/service meets customer
expectation
What cannot be measured cannot be evaluated.

Image Credit: Brian Van Kessel 2005


Efficiency vs. Effectiveness
Efficiency:
Doing things right
Increases productivity

Effectiveness:
Doing the right things
Creates value


Measures
Peter Drucker’s Effectiveness/Efficiency Matrix

High

SURVIVE THRIVE

Effectiveness

DIE SLOWLY DIE QUICKLY
Low

Low High
Efficiency


Business Process Change Model

Information and Technology
Strategy •Data & Information
•Information Technology

Why •Decision, Simulation & Modeling
Tools
Change? What to Change?
•Environmental
Products, Services &
Factors
Management Business Processes People Performance
•Customer &
•Style •Inter-Organizational •Skills •Cost
Supplier Power
•Systems •Cross-Functional •Behavior •Quality
•Economic
Conditions •Measures •Intra-Functional •Culture •Customer Satisfaction
•Cultural Factors •Risk Propensity •Values •Flexibility/Innovation
•Industry •Shareholder Value
Competitiveness
•Political Factors
Structure
•Technological
•Formal/ Informal Organization
Innovation
•Teams/Work Groups
•Coordination/Control
Strategy Adapted from Kettinger &
•Jobs
Grover 1995


Process Maps
A drawing that shows a sequence of steps,
events and activities from beginning to the end of
a process
A “Road map” for how to get from “here” to “there”
A good tool for identifying improvement
opportunities

Use a process
Confused Back on track!
map!


Why Use Process Maps?
Help a team come to a common understanding of a
process
Educate a team on the steps in the process
Find unnecessary or redundant steps in the current
process
Find missing steps in the process
Find efficiencies in the process flow
Look in more detail at the current methods being used in
each part of the process
Identify the supplier and customers of the process (both
internal and external)
A powerful communication tool

Process Interaction Example


Lets try an example
A salesperson calls in with a proposed deal
The call is taken by one of 6 people
Whoever takes the call logs it and document it on paper
A clerk then carries the paper documentation to a second person
who checks the customer’s credit worthiness
The result of the credit check together with the original
documentation is given to a loan officer who would then modify
the standard agreement
All information is then passes to another person who determines
the interest rate
Another person prepares a quote letter
The quote letter is then sent to the salesperson
Each step involves a different computer system

Software to the Rescue
Current prediction on world-wide expenditure on
business process management software
2001 2.1 billion US$

(source: Aberdeen Group)


Process Mapping Key Players


Toolsets Available for Process Mapping

A.R.I.S.
Architecture of Integrated Information Systems
Framework or concept for describing companies and business
application systems

Microsoft Visio
www.gliffy.com
Pen and Paper/Whiteboard


House of Embedded
Engineering Approach
1. Business Process Design
Describes the business processes with models and visual guides
Lays the groundwork for a qualitative approach to process
management
Presents opportunities to identify key performance indicators
2. Business Process Management
Provides procedures for time and capacity controlling as well as
cost analysis
3. Process Control
Implement new and more efficient procedures
4. Process Application
Implementation of the newly refined business processes


Process Engineering/Reengineering
with the Toolsets
The most frequently used model type of the process
view is the Extended Event-Driven Process Chain
(eEPC)

This model allows for degrees of complexity
As simple and lean as process steps only
As complex as to include data, function, organization views

Generally accepted as they are simplistic and use
easy-to-understand notation

Extended Event-driven
Process Chain (eEPC)


Basic Elements of the eEPC
•A function is a technical task, a procedure, and/ or
an activity performed on an (information) object to
support one or more company goals.
Function
•A function uses time and/or has a cost associated
with it.

•An event represents a business relevant occurrence
which either controls or influences the continuation
Event of a business process.

•Events act as triggers for activities, but are also
based on preceding functions and therefore describe
an event


Business Process Components


Toolset Views


Strategic Perspective: Value Chain


Organizational Perspective:
Organigram


Functional Perspective:
Function Tree


Data Perspective: Entity
Relationship Diagram


Database Structure
The Database Structure of ARIS
All information is stored in a database
The database helps to avoid redundancy in the models
design


Occurrence Copy
Reuse of existing objects
•Helps to identify interdependencies between processes
•Redundancy free data storage
•Allows for easy update of an objects attributes


Definition Copy
When you copy the object a separate entry is created in the
database
The new object has no reference to the original object


Variant Copy
When you create a variant, a separate entry in created in the
database which references its original definition
Allows the user to compare and contrast the new object against
the existing object


Logical Link Operators
Significance when Significance when
Name Symbol paths are separating paths are converging

The following process
Only one of the
flow will be initiated from
Exclusive OR possible process paths
only one of the possible
must be followed
process paths

The following process
At least one of the
flow will initiated by at
Open OR possible process paths
least one of the
must be followed
possible process paths

All incoming process
paths trigger the
following process flow.
If one of the paths has
All outgoing process not been fully
AND
paths must be followed completed, then the
process pauses at this
point until all incoming
process paths have
been completed.



AND A+B

Open OR A, B, or A+B

XOR A or B


Loan application
received

Verify loan
application
details

Loan application Loan application
approved rejected


Event and Function Triggers


Summary: eEPC Modeling Rules
An eEpc begins and ends with an event(s) (or with process
interface(s)).
The sequential order Event-Function-Event-Function must be
followed and can only be interrupted by logical link operators
Trivial events are to be omitted (events in a sequence in the
middle of the process flow)
Logical link operators can only be used for multiple process
paths
Logical link operators have either one incoming connection and
several outgoing connections, or several incoming connections
and one outgoing connection.
No OR operator or exclusive OR (XOR) operator may follow an
individual event
Any number of paths is possible for branches


Model Assignments
An assignment is a model that describes an
object in more detail
Various degrees of modeling – top level,
lowest level


Model View of Assignments

HR / Support

Research and Development

Procurement Production Sales Accounting

Production Sales


Linked Procurement Model
Identify need for
raw materials

Verify purchase
order against
delivery
Create purchase
requisition

Send requisition
for approval

Order fullfilled Order flawed

Process payment
Contact supplier
to supplier
Requisition Requisition
approved rejected

Procurement
process
complete
Create purchase
order for
supplier

Goods delivered


Link to Physical Sales eEPC

Order follow-up Feedback received

Order confirmation
created

Customer order entered Order confirmation

Production planning Production plan created

Order Rejected


Benefits of Process Mapping
Help a team come to a common understanding of
a process
Find unnecessary, missing or inefficient steps in a
current process
Look in more detail at the current methods being
used in each part of the process
Identify the supplier and customers of the process
(both internal and external)
As a powerful communication tool


Exercise
When an article inquiry is received the process begins.

After the inquiry has been recorded, the inquiry data is transferred to the
offer to be issued by the order handling secretary using MS Word. She will
use the customer inquiry, customer data and customer conditions in issuing the
offer.

The order handling employee will check the availability of the desired articles. This
is done in the SAP R/3 System using the article data and the customer inquiry.

If delivery is not possible, the order handling employee must agree on an alternative
delivery date with the customer. If the delivery is possible then the delivery date can
be defined. Only then can the articles be reserved in the SAP R/3 System.

Of course, a customer rejection can also result when an alternative shipping date is
offered if the customer is not willing to accept another delivery date.

When the products are reserved, the offer is generated by the order handling
secretary in MS Word. The department apprentice monitors the offer in Applix.

While the offer is being monitored it may still be cancelled in process by the
customer.

When the customer order is received, the process customer order process is
started. If may also happen that the customer offer is rejected.

Identify the Events & Events and Functions

offer.





customer.


Events and Functions

offer.





customer.


Article inquiry

Enter inquiry
data into offer

Reserve article
Check availability
of article

Article reserved

Delivery NOT
Delivery possible Generate offer
possible

Agree on
alternative Offer created
delivery date

M onitor offer

Customer offer Delivery date
rejected defined

Customer order Customer offer
received cancelled


Identify the Applications

offer.





customer.


Applications

offer.





customer.


Article inquiry

Reserve article
Enter inquiry
data into offer

SAP R/3
MS Word
Article reserved
Check availability
of article

SAP R/3
Generate offer

MS Word

Delivery NOT
Delivery possible Offer created
possible

Agree on
alternative Applix Monitor offer
delivery date

Customer offer Delivery date Customer offer Customer order
rejected defined cancelled received


Identify the Organizational Elements

offer to be issued by the order handling secretary using MS Word. They will
offer.





customer.


Organizational Elements

offer to be issued by the order handling secretary using MS Word. They will
offer.





customer.


Article inquiry

Employee
Reserve article
Enter inquiry Order handling order handling
data into offer secretary

SAP R/3
M S Word
Article reserved
Check availability Employee
of article order handling

SAP R/3
Order handling
Generate offer
secretary

MS Word

Delivery NOT
possible

Agree on
Employee
alternative Applix Monitor offer Apprentice
order handling
delivery date



Identify the Data Stores

offer.





customer.


Data Stores

offer.





customer.


Article inquiry

Customer data Customer inquiry Customer conditions

Enter inquiry Order handling
data into offer secretary
Article data

Employee
MS Word Reserve article
order handling

SAP R/3
Article data Customer inquiry
Article reserved
Check availability Employee
of article order handling

Customer offer
SAP R/3
Order handling
Generate offer
secretary

MS Word

Delivery NOT
possible

Agree on
Employee
alternative Applix Monitor offer Apprentice
order handling
delivery date



The End

Thank you for your attention

Special thanks to:
Brian Van Kessel @ Ryerson University Toronto


Business Process Design 2008

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