Business Process

Management
Chapter 1

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What is Business Process ?
• Is triggered by an external business event. It’s everything we do!!
• Is comprised of all the activities necessary to provide the appropriate business outcomes in
response to the triggering business events.

• Transforms inputs of all types into outputs, according to guidance (policies, standards,
procedures, rules etc.) employing reusable resources of all types.

• Contains activities which usually cross functions and often organizational units.

• Has performance indicators for which measurable objectives can be set and actual performance
evaluated.

• Delivers a product or service to an external stakeholder or another internal process.

• Usually connects to other processes.

It’s HOW we do what we do!

Business processes categories
• Operational processes (or primary processes): Operational or primary processes deal with
the core business and value chain. These processes deliver value to the customer by
helping to produce a product or service. Operational processes represent essential
business activities that accomplish business objectives, e.g., generating revenue. Some
examples of this include taking customer orders and managing bank accounts.

• Supporting processes (or secondary processes): Supporting processes back core processes
and functions within an organization. Examples of supporting or management processes
include accounting, HR management and workplace safety. One key differentiator
between operational and support processes is that support processes do not provide value
to customers directly.

• Management processes: Management processes measure, monitor and control activities

related to business procedures and systems. Examples of management processes include
internal communications, governance, strategic planning, budgeting, and infrastructure or
capacity management. Like supporting processes, management processes do not provide
value directly to the customers.
What is BPM
• BPM is a set of processes that help organizations optimize their
business performance. It is a framework for organizing, automating
and analyzing business methodologies, metrics, processes and
systems that drive business performance.

• Business Process Management (BPM) is a disciplined approach to

identify, design, execute, document, monitor, control, and measure
both automated and non- automated business processes to achieve
consistent, targeted results consistent with an organization's
strategic goals. BPM involves the deliberate, collaborative and
increasingly technology-aided definition, improvement, innovation,
and management of end-to-end business processes that drive
business results, create value, and enable an organization to meet
its business objectives with more agility.”
Business processes Types
Human-intensive processes
• In such processes there is a lot of interaction and involvement of people in each step of the
business application – people talking to databases, documents and other people. They
require human judgment and intuitions for decision making during individual steps of the
business process. Examples of human-centric processes include

• Claims processing
• Loan approvals
• Accounts payable
• Mortgage origination
• Customer service
• Travel requests
• Purchase requests
• Work submitted by insurance agents and adjusters

• If you notice these predominantly deal with routing of work from one individual to another
and support how each person will interact with that piece of work. This type of process
does not generally incorporate many systems into the work flow
Business processes Types
System-intensive processes
• These are the processes in which millions of transactions take place every day, which interact with
packaged applications, custom applications, external applications, and very occasionally with humans.
Examples include trade reconciliations, supply chain management, and line provisioning in the
telecommunications market.

• A high volume of transactions, the need to integrate with other systems, and a high degree of straight-
through processing with very limited human interaction puts you in this category.

Document-intensive processes

• These processes require users to review documents for approval, enter data from those documents into a
back-office system, and make decisions. Action is driven by information found in scanned images or
electronic forms, or possibly electronic documents created in Microsoft Word or other tools. If your
processes have a strong need for image capture, forms processing, and document management, make
this BPM category your highest priority.

• Some of the examples of document intensive processes include new-account opening, invoice
processing, and litigation support or industry-specific processes like medical records, mortgage
origination, claims processing, or loan approval
 Benefits of BPM
o Improves process quality, reliability and output.✔
o Helps for continuous process improvement that provides foundations for BPR.
o Maximizes process visibility that helps in reducing costs.
o Improves strategic decision-making by providing correct information at correct time. It provides end-
to-end performance visibility and optimization of resources.
o Improves operational efficiency that results in the avoidance of wastage and loss of company
resources.
o Consistent execution reduces process cycle time.✔
o Improves customer satisfaction by delivering better and enhanced value.✔
o Promotes organizational flexibility and business agility.✔
o Promotes communication and collaboration between departments.✔
o Helps in standardization of procedures.✔
o Helps in measuring KPIs and thus improves accountability.
o Promotes safe working conditions that protect company resources.✔
o Defines roles and responsibilities that increases employee efficiency and satisfaction.
o Simplifies regulatory compliance.✔

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 BPM Life-Cycle
Following are stages in BPM
Life-Cycle:
 Designing,
 Modeling,
 Executing,
 Monitoring
 Optimizing

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 1. Designing
BPD is the systematic working by which an organization understands, defines and
documents the business activities that enable it to function efficiently, effectively and
economically.

The purpose of BPD is to ensure that processes are optimized, effective, meet
customer requirements, support and sustain organizational development and growth.

Designing a process that improves corporate performance is a challenging task that

requires multi-disciplinary expertise and a plethora of inputs (for instance,
organizational strategies, goals, constraints, human and technical capabilities, etc.).

The most common requirements of a BPD are:

 Customer and supply chain management
 Operational performance improvement
 Business process integration and automation
 Cost reduction
 New business opportunities.
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 2. Modeling
The output of a BPD project is a streamlined, comprehensive, easy-to-use
model of the ways in which a business delivers output to its customers. One of
the key purposes of process modeling is to provide a “process view” of the
business.

BPMd typically consists of a set of diagrams, textual descriptions and data

elements that provide both overview and detailed information about the
business processes in a format that is easily understood by everyone.

The key components of a typical BPMd are as given below:

 The set of processes and activities that take place within an organization
 A written description of each process or activity or task
 Workflow diagrams
 Inputs & outputs
 KPIs

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 3. Executing
It refers to automating processes by using BPM application
software that executes the required steps of a process. BPM
soft-wares are either purchased or developed to fit to the
requirements of a company. Please refer to Appendix A for
BPM soft-wares.

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 4. Monitoring
Monitoring refers to tracking of individual so that
processes, information about them can be checked.

An example of the tracking is being able to determine the stage of a

customer order (e.g. order arrived, awaiting delivery, invoice paid) so
that problems in its operation can be identified and corrected.

The degree of monitoring depends on what information a business

requires to evaluate and analyze and how that business needs it to be
monitored, in real-time, near real-time or ad-hoc. Here, business
activity monitoring extends and expands the monitoring tools
generally provided by Business Process Management Suites
(BPMS).

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 5. Optimizing
Refers to retrieving process performance information from
monitoring phase, identifying the potential or actual problems,
recognizing the opportunities for cost cuttings or further improvements and then,
applying those enhancements in the design of the process. In more specific terms,
optimizing may include the following activities:

 Improve processes and performance by reducing inefficiencies identified during

monitoring.
 Simulate these changes using “what-if” simulation.
 Determine which changes will deliver the maximum improvement.
 Build the processes on firm footing.

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Implementing BPM
• 1. How Comfortable Are Your Employees?
• 2. What Is the Cost of Transitioning?
• 3. What Is the Size of Your Organization?
• 4. Are You Hitting Your Goals?

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Identify Appropriate
Measures
 Process and Project goals and objectives will determine required
level of Measurement

 Can be a mix of process model levels

Measurement
Granularity
(Number of
Measured Sub
Processes)

Significance of Process Change

 Should at lease measure overall process performance

 Details are required for incremental change, 80/20 tells where to drill
Develop/Clarify
Measurement Criteria
 Timeliness - understand your business cycles
 should recognized and represent variations in operations

 Validity - must be a valid measure of process performance

 orders filled and orders processed vs. pulls per hour

 Completeness - right level of measures for project objectives

 who needs information and how much do they need

 Inclusiveness - all appropriate costs not just a few

 should include all related costs, including such things as overhead, space, supplies, etc.

 Cost Effectiveness - measuring is not FREE

 value of measurement vs. the cost of obtaining

 Comparability - before and after

 apples - to - apples

 Balanced - include measurements from all three categories

 Perspective - various stakeholders

 internal
 external
Aspects of Measurement
Only Measure Performance Improvement Targets

Quality and Effectiveness Efficiency Measures: Adaptability Measures:

Measures:
 Cost  Product and service variability
 Appropriateness  Cycle time  Job satisfaction
 Customer Satisfaction  Wait time  Ability to handle non standard
 Quality  Wastage customer requirements
 Defects  Scrap  Time to profit
 Cost of Non Conformance  Spoilage  Time to market
 Price  More capable work force
 Responsiveness  More flexible staff
 Consistency  Equipment Capability
 Profitability  Business Disruption
 Market Share  Morale
 Real Value-added to
 process cost

Common denominators are often Time, Cost, and Customer Satisfaction

Process measures must be directly related to business performance measures
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Workflow for Project Delivery

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Workflow for Purchase of Materials

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Purchasing of
Materials –
Workflow
Diagram

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