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1.0 INTRODUCTION 1.1 When World War II ended, Pan American World Airways had 100 percent of Americas Pacific market, 90 percent of the Caribbean market, and nearly a third of the transatlantic market. By 1991 its share had dwindled to nothing; Pan Am was gone. 1.2 In 1981 Wang Laboratories, an esteemed pioneer in electronic calculators and word processors, was eleventh largest U.S company. Ten years later it barely existed. 1.3 Between 1987 and 1993 International Business Machines, once worlds premier computer company, saw its customers flock to smaller rivals and the market value of its stock plunge $27 million. 1.4 With a few exceptions like Alfred Sloans General Motors, the vast industrial organizations that led the centurys unprecedented economic growth werent planned and built by design. Rather than managerial expertise, it was the genius and good fortune of the original visionary plus exploding demand that led to business success. 1.5 Business reversals of the scale and frequency we have seen in modern times cannot be attributed to extraordinary factors. Their leaders and staff were neither incompetent nor ignorant it was just that the known techniques were inadequate to wade of the calamity. 2.0 BIRTH OF BPM & BPR 2.1 In the second half of 1980s, a handful of companies Ford Motor, Texas Instruments, Taco Bell etc embarked on programmes of business improvement that would transform American industry beyond recognition. These companies realized that their old ways of operating their long-standing methods for developing, making, selling, and servicing products were inadequate, and that they had to take measures more radical than they had ever taken before. Thus began Business Reengineering. They ripped apart their old ways of doing things and started over with clean sheets of paper. 2.2 Pressured by suddenly powerful international competition (especially the Japanese) and ever more demanding customers, companies embarked on crusades to lower costs, improve quality & productivity, increase flexibility, shrink cycle times and improve customer service. 2.3 All these exercises did not produce the desired results. Following are some cases in point
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2.3.1 It took Texas Instruments Semiconductor Group 180 days to fill an order for an integrated circuit while a competitor could do it in thirty days. 2.3.2 Pepsi discovered that 44 percent of invoices that it sent retailers contained errors, leading to enormous reconciliation and endless squabbles with customers. 2.3.3 When buying anything through their purchase department, even for a small stationery item costing less than $10, Chrysler Corporation incurred internal expenses of $300 in reviews, signatures and approvals. 2.4 After a while, understanding dawned on these companies. They were getting nowhere because they were applying task solutions (isolated remedies) than applying process solutions (holistic remedies). 2.5 A task is a unit of work, a business activity normally performed by one person, whereas, a process is a related group of tasks that together create a result of value to a customer. Order fulfillment, for instance, is a process that produces value in the form of goods delivered to the satisfaction of customers. It is comprised of great many tasks like receiving the order, entering the data on register / computer, checking customer credit, scheduling production, allocating inventory, packaging planning and procurement, loading, invoicing and many more. None of these tasks by itself can create value. Only when they all are put together in synergy, value is created. 2.6 This wisdom led to adoption of new methods of business improvement, that focused on business processes. Two of the best known and most successful methods are Total Quality Management (TQM) and Business Process Reengineering (BPR). 3.0 WHAT IS A BUSINESS PROCESS? 3.1 We have said that a process is a group of tasks that together create a result of value to a customer. The key words in this definition are group, together, result, and customer. The essence of a process is its inputs and its outputs what it starts with and what it ends with. Everything else is detail. 3.2 A business is any organization whose aim is to create results of value for someone who cares about those results. In simple terms, the purpose of any business is to act as a transforming mechanism.

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BUSINESS PROCESS MANAGEMENT


3.3 A true business process starts with the first event that initiates a course of action. It isnt complete until the last aspect of the final outcome is satisfactory from the point of view of the stakeholder who initiated or triggered the first event. 3.4 A business process comprises of all the things we do to provide someone who cares with what they expect to receive. It also contains all the actions we take when we fail to meet the expectations. 3.5 Within any business process, input of all types such as raw materials, information, knowledge, commitments, and status are transformed into outputs and results. Reusable resources are employed to enable the change to happen such as facilities, equipment, technologies and people. 3.6 When appropriate events and conditions trigger actions, customer requirements and consumable resources such as raw materials, money, and information are transformed into goods, services, and business outcomes for customers benefit. These results can have a physical component, such as a tangible product, as well as an informational or knowledge based one, such as a report, book, or expertise provided. 3.7 Regardless of the nature of delivered results, an emphasis on service and customer retention is the objective of most 21st century organizations. This outside-in perspective cuts across organizational structures, geographics and technologies, and begs the question 3.7.1 3.7.2 How do we know the criteria for satisfactory conclusion?, which leads to What relationship must we have with the stakeholder who initiates action?, which leads to that is, who and what matters to the

3.7.3 Who cares? business?. 4.0

WHAT IS BUSINESS PROCESS MANAGEMENT? 4.1 BPM is itself a process that ensures continued improvement in an organizations performance. Processes are treated as assets of an organization, much like people, equipment etc. When well managed, they will pay off in terms of performance. 4.2 This means, taking a radical-change perspective, questioning the fundamental tenets of the business processes. The processes might undergo a cycle of continuous review and improvement with adjustments all the way.
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4.3 At the same time that the businesses are serving their customers and consumer markets, their performance is measured in terms of appropriate key performance indicators (KPIs) and evaluated against the requirements of the business owners and investors. 4.4 The business applies a number of reusable resources to enable this transformation. These capabilities include Cross-functional business processes. Interestingly, businesses might not recognize them as processes. Physical facilities. These include offices, factories, equipment, and tools. Computing and communication technology. These enable information flow, knowledge sharing, and communication. Human resource.

4.5 The traditional challenge of any business is to optimize results from competing courses of action, given performance objectives and scarcity of some resources. 4.6 This isnt easy given the number of interdependent variables. It is made more difficult by the rapid changing conditions of business environment. So, the management has to be highly innovative and daring to make the difficult decisions in a state of uncertainty and even total chaos. 5.0 INTERNAL VERSUS EXTERNAL PERSPECTIVES 5.1 The needs and expectations of the customers, suppliers and shareholders will ultimately rule in any competitive business environment but might not be the focus of staff and managers. This classic battle pits workforce performance measures and incentives (internal perspectives) against the true requirements of the market forces (external perspectives). 5.2 The vertical structure of most organizations recognizes and rewards those who perform well against arbitrary, divisional targets. Unfortunately, these targets are often misaligned with external requirements, which are not highlighted to the employees. 5.3 The challenge is to align these two perspectives by segmenting programmes of change into value-creating streams focused on and measured by outsiders.

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5.4 To do this, all analyses and designs need a process perspective. A process is also the primary way of segmenting, and is the vehicle that delivers results valuable to those who really care. 5.5 To be serious about its processes, to start down the road to process centering, a company must do four things 5.5.1 First, the company must recognize and name its processes. Real processes often cut across the organizational functions. Process identification requires a new cognitive style, an ability to look horizontally across the whole organization, as if from the outside (from the perspective of the final beneficiary), rather than from top down. 5.5.2 The second key step is to ensure that everyone in the company is aware of these processes and their importance to the company. The key word is everyone from the top executive to the man on the shop floor, from head office to the most distant sales branch, everyone must recognize the companys processes, and be clear about their inputs, outputs and relationships. This again is a big challenge because it requires total change in peoples mind-sets. 5.5.3 The third step to process centering is process measurement. If we are to be serious about our processes, we must know how well they are performing. Companies must identify the key measures by which each of their processes will be assessed, and they must be based on what is important to the customer. Measures are an effective tool in shaping peoples attitudes and behaviours. They are central to making a team of people have a common objective and to work together. 5.5.4 The fourth step is the backbone of the whole exercise, namely process management. A process centered organization must strive for ongoing process improvement. To accomplish this, the company must actively manage its processes ensuring that they are performing up to their potential, looking for opportunities to make them better, and translating these opportunities into realities. The heart of managing a business is, indeed, managing its processes. 5.6 These four steps start an organization on the road to progress, but it is not a one-shot exercise it is a journey. It is the fundamental reconceptualization of how businesses should be run.

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5.7 In the succeeding articles, we shall take a look at the three apexes of the business triangle the people, the managers and the enterprise and how they are transformed in Business Process Management. 6.0 FROM WORKER TO PROFESSIONAL 6.1 All work activities can be classified into three types 6.1.1 Value-adding work, or work for which the customer is willing to pay 6.1.2 Non-value-adding work which creates no value for the customer but is required in order to get the value-adding work done 6.1.3 Waste, or work that neither adds value nor enables value addition 6.2 Value adding work is easy to identify. It consists of all the activities that create the goods and services that customers want. For example, delivering goods to the customer at a specified time schedule, is a process consisting of value-adding activities like inventory allocation, production planning, manufacturing, testing, packing and shipping. 6.3 Waste work is pointless work whose absence would, by definition, not be noticed by the customer. Reports that no one reads, producing scrap & reworks, needless checking, delay due to absence of operators etc are some examples. 6.4 Non-value-adding work is the glue that binds together all the value-adding works into a process stream. It is work that is needed to make conventional processes function like inspection, dispatch documentation, supervision etc but it is also the source of errors, delay and inflexibility. These works are required but have a tendency to bring in rigidity, and hence inefficiency.

6.5 BPM aims to eliminate all waste works, to trim the non-valueadding works and to improve value-adding works. As a result the jobs tend to become bigger and more complex. The focus changes the boundaries of traditional jobs, expanding their scope, so that less of glue is required to put them together. For example, in a particular telephone company, responding to a customers complaint involved three different value-adding activities docking the nature of the complaint, checking the equipment and lines, and sending a
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SUNRISE ACADEMY

BUSINESS PROCESS MANAGEMENT


repairman, if required. Performed by three persons, the process required efficient communication and coordination amongst them, but always prone to errors and delays. After BPM was introduced, all these three tasks are performed by one single person with the designation customer service executive. 6.6 Even when one person cannot perform an entire process, it is still possible to have everyone who is involved in the process understand it in its entirety and focus on its outcome. This makes people appreciate the larger context of their work and eliminates crossworking in the process. This has given birth to the concept of task groups or teams with facile role-swapping and common aim. 6.7 By this, the little man who has been doing a little job repetitively, day in and day out, suddenly finds himself with a larger responsibility. In addition, he has got the room to make his own decisions and act on it. It gives him a sense of accomplishment, importance and pride. 6.8 No doubt, in some cases, learning new skills may become difficult. But with appropriate encouragement and incentives, most humans are capable of learning, especially when it leads to opportunities for autonomy and growth. 6.9 The virtual absence of non-value-adding work means that people can concentrate on real work meaningful to them and the customers. It also transforms attitudes. Accountability increases leading to professionalization. 7.0 FROM MANAGER TO PROCESS OWNER 7.1 The objective of BPM is to have high performing processes simple, lean, low cost, and flexible. This must be based on jobs that are broad-based, which in turn mean that we must have workers capable of performing process-focused jobs jobs that demand understanding, responsibility, autonomy and decision making without supervision. So, the traditional role of a manager also undergoes a radical change. 7.2 The department manager dons a new role, that of a process owner, an individual concerned with ensuring, not just the performance of tasks under him, but the successful completion of a total end-to-end process. 7.3 In general, we can break down the process owners responsibility into three major areas design, coaching and advocacy.
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7.4 DESIGN 7.4.1 The process owner owns not only the performance of the process, but also its design, sharing it with all the teams performing it. Creating and maintaining it is the first responsibility of the process owner. It is for the owner to find and formulate the best way of filling orders, developing products, resolving customer complaints, and then make sure that it remains the best way. 7.4.2 It is the process owners next responsibility to provide the teams with the knowledge of the process so they can perform it. He is in charge of the documentation, and training of the members in its structure and conduct. 7.4.3 In addition to meeting customer requirements, the process owner must also establish measures that meet the companys needs in terms of profitability, return on assets, growth rate and the like. 7.4.4 These targets are not static but ongoing and dynamic, taking into account the changes in customer requirements and technological capabilities. The process owner adopts techniques like QFD to constantly benchmark his process against customer demands and competitors position. 7.4.5 Most importantly, the process owners have control over automation efforts to improve processes. Earlier, automation used to be based on line balancing, productivity and cost effectiveness on isolated tasks, but never with the holistic view of the whole process. 7.5 COACHING 7.5.1 Once process performers have been trained in the process design, the process owner is available to help them through difficult situations. Whenever the individual members lose focus, or having problems adapting to the design, the process owners expertise is sought to link the tasks into one body of work, and to ensure that they all work together. 7.5.2 Team breakdowns are a particular source of problems, wherein the process owners human relationship skills are tested. Friction and conflicts are part of any change process,
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and the process manager has to be trained in it and equipped to face them. 7.5.3 It must be made clear here that coaching is not supervising. The process owner is essentially a facilitator, an enabler of those who actually perform. He does not admonish, but simply guides whenever things are not on the right track. 7.6 ADVOCACY 7.6.1 The performers carry out the process, but the owner represents it. It is the owners job to obtain the financial resources that the process needs. Typically, the process owner is part of a larger process council, which consists of the business owner as leader, and all the other process owners and key support groups. This process council addresses the needs of the business as a whole, and allocates resources accordingly. 7.6.2 Therefore, the owner must maintain close communication with his performers to know what is required, what is working, and when required. The owner is also likely to have supporting groups to assist him in retraining, redesigning and such activities. 7.7 To summarize, in business process management, the traditional managers role is totally redundant. In his place comes up the process owner. A process owner must have the engineering skills to measure, diagnose, and design the process; the interpersonal skills to coach the performers carrying out the process; and the political skills to advocate for it. It is a person who knows how to coach, counsel and help, knows how to get resources and how to remove obstructions, and who is capable of engendering a loyalty and hard work. 8.0 FOUR PRINCIPLES OF BUSINESS 8.1 Principle 1: The mission of a business is to create value for its customers. 8.1.1 The focus of every business is undoubtedly its customers. Customers are people whose behaviour the company wishes to influence by providing them with value. That means, the company may have to deal with more than one customer for every product or service it offers. 8.1.2 For example, a pharma company has to satisfy the patient who takes it medicine; it has to satisfy the physician who
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recommends it; and the pharmacist who dispenses it; the wholesaler, the FDA, insurance companies and so on. All of them are customers. So, the company has to create value for each and everyone of these, if it has to succeed in its business. 8.1.3 What is value? Value in business context means, not just the product or service, but whatever it takes to answer the customers need. True innovation entails anticipating the opportunities for meeting latent need, for solving problems the customer may not even recognize that they have. 8.1.4 A consequential objective will be to create shareholder value, but that should not be the main mission. It must come out of providing value to the customers. 8.2 Principle 2: It is a companys processes that create value for its customers. 8.2.1 This is just a restatement of our definition of a process as a group of tasks that create customer value. It is only the whole processes, all the tasks integrated together, that create value. 8.3 Principle 3: Business successes come from superior process performance. 8.3.1 Traditional belief is that the way to success lies through superior products and/or services. But in BPM, if our purpose is to create value and processes do that, then better processes will do it better. 8.3.2 Delivering consistently superior products over long period of time requires a set of consistently superior processes for product development, manufacturing, delivery and service. So it is not just any one product but its process capability that gives the company its crucial advantage. 8.3.3 If the process design is replete with handoffs, reviews, checks, and other non-value-adding activities then the process will be slow, inflexible and error-prone despite the talent and brilliance of the individual workers. 8.4 Principle 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. 8.4.1 A process cannot perform better than its design allows, and the process design limits the process performance how well
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it can possibly perform if all performers do what is expected of them. 8.4.2 Next, people. In order to compete in a world of changing customer preferences and rapidly evolving technologies, many companies are adopting number of new techniques like concurrent engineering, QFD and so on. This brings people with different skills such as manufacturing, finance, marketing and quality to work together. But ultimately it needs the right people to implement it. 8.4.3 Right people does not necessarily mean the best. The process performers and leaders are to be well matched by way of expertise training and attitudes to their requirement of the process design. 8.4.4 Finally the company environment plays an important role in process performance. Organisations must have a spirit and a soul to encourage people to exercise their potential and to make a process hum. The right environment will encourage, motivate, and liberate people to perform. 8.5 Business success is not mysterious: it has very concrete and specific pre-requisites as discussed above. To implement our prescription for business success requires that we rethink the model of business management in terms of superior process performance.

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