Enterprise Transparency. The Process Performance Lifecycle.

Transcription

1 Enterprise Transparency The Process Performance Lifecycle

2 Key Insights about Business Processes Dr. Michael Hammer 1. A A bad process is better than no process! 2. A A good process is better than a bad process! 3. Even a good process can be made better!

3 What is Business Process Management (BPM)? BPM is a systematic approach to enabling companies to rapidly respond to changing market conditions through enterprise transparency and improved decision making capabilities. The Value of BPM: Market Cap Share Price ❶ Increase Transparency ❷ Reduce Costs ❸ Increase Efficiencies ❹ Improve Predictability ❺ Increase Flexibility

4 Business Process Excellence Lifecycle Process Controlling: Ongoing monitoring and measurement of process execution for the purpose of ensuring process conformance and performance are being achieved according to established KPIs. Process Architecture: The general framework and structure of the process architecture. Process Optimization: Changes made to the process in order to optimize qualitative or quantitative aspects such as cycle time, cost, quality, governance, risk or compliance. Process Model: Either an abstract or detailed definition of process flow, linking business data with organizational structure, application/systems technology supporting and projects. Process Execution: The manual or automated activity that is carried out according to the defined and documented process model. Process Documentation: A written description of the process steps and the underlying attributes supporting process objects such as events, functions, organizational roles and IT systems.

5 Top 10 Topics: Business / Technology "It's time for CIOs to develop business process improvement capabilities as part of the core of IT. This will enable them to respond to executive expectations that see business processes as important to business performance, as closely associated with application systems and as a responsibility of the CIO and IT." Mark P. McDonald, Group VP and Head of Research for Gartner EXP, 14 Jan 2009 Top 10 Business Priorities Rank Top 10 Technology Priorities Rank Business process improvement * 1 ( ) Business intelligence applications 1 ( ) Reducing enterprise costs 2 ( 3) Enterprise applications (ERP, CRM and others) 2 ( ) Improving enterprise workforce effectiveness 3 ( 3) Servers and storage technologies (virtualization) 3 ( ) Attracting and retaining new customers 4 ( 2) Legacy application modernization 4 ( ) Increasing the use of information/ analytics 5 ( 3) Collaboration technologies 5 ( 3) Creating new products and services (innovation) 6 ( 3) Networking, voice and data communications 6 ( 1) Targeting customers and markets more effectively 7 ( 2) Technical infrastructure 7 ( 2) Manage change initiatives 8 ( ) Security technologies 8 ( 2) Expanding current customer relationships 9 ( 2) Service-oriented applications and architecture 9 ( 1) Expanding into new markets or geographies 10 ( 6) Document management 10 ( 1) Source: Gartner EXP worldwide survey of 1,500+ CIOs shows IT spending to be flat in (ups/downs compared to Jan 2008) *) No. 1 topic since 2005 IDS Scheer AG 5

6 Lack of Transparency Hinders Improved Performance IDS Scheer AG 6

7 Next Generation Analytical Systems Only around 20% of business users regularly use BI Business intelligence is an umbrella term for Applications Infrastructure, platforms, tools Best practices which enable the analysis of information in order to optimize decisions and manage performance. Kurt Schlegel (Gartner): The view of BI as an IT-centric activity getting the right information to the right people at the right time is outdated. BI has to evolve beyond that and move toward business processes and business strategy. IDS Scheer AG 7

8 Business Performance is a Result of Operational Execution Business Performance FINANCE Revenue EBIT Cashflow IDS Scheer AG 8

9 Process Performance is a Leading Indicator of Business Performance Profits Revenues Customer satisfaction Repeat order ratio Cost reduction Improved operational efficiency Faster inquiry response Better inquiry information classification Higher communication efficiency Products Sales Group Customers Inquiry Topic Faster quality improvement initiatives Faster feedback to production Inquiry frequency Operations team Operations shift IDS Scheer AG 9

10 Intelligence for the Whole Business Business Performance Operational Excellence Process Excellence Process Excellence Operational Excellence Business Performance FINANCE Processes and Organization Revenue Volume Times Indicators Trend analysis Influencers Distribution Strategic EBIT Cost Cashflow Quality Risks Organizational performance Root Cause Analysis Metrics / Symptoms Structures Tactical Compliance Customer satisfaction Process flow Communication Data flow Material flow Operational Lagging Indicators Leading Indicators (Automatic) Discovery, Calculation and Benchmarking of Metrics and Structures Unique combination of strategic, tactical and operational analytics

11 Beyond Traditional Business Intelligence Traditional BI does not cover all aspects of the organization. Where am I? I? BI Lagging Indicators Purely data-driven Vertical Data Segmentation BPM PPM BI does not provide sufficient feedback on where and how to optimize the business processes Since business processes are core drivers for a company's success, a permanent performance monitoring solution must be implemented along with regular reviews of the actual business processes. Root-cause analyses will uncover potential process optimization scenarios by answering which structures of the organization and the processes have exhibited particular performance. The captured process logic of executed processes is considered as one of the main competitive factors of an organization.

12 Beyond Business Activity Monitoring (BAM) What is a Business Activity Monitoring? collecting business events across multiple applications through the use of messaging, adapters and agents a continuous operation rule engine with threshold, sequence and time-based processing of userdefined metrics to indicate a threat or opportunity. the output of a BAM system drives a dashboard and issues alerts, which are sent to a person or process optionally, a historical operational data store for trend analysis IDS Scheer AG 12

13 Process Performance Management Process Intelligence + Process Monitoring + Process Modeling = Process Performance Management On Demand Measurement and Analysis of actual running processes Automated collection Always-on monitoring Early Detection of anomalies Alerting Root-Cause Analysis Process Monitoring tim e Process Modeling Process Intelligence Process Performance Management

14 Holistic Event and Process Analysis Operational Process Monitoring IF a job of priority very high is started AND not completed within 8 Minutes THEN send an to the responsible call stuff AND trigger the flash light. SLA commitment guaranteed time Process Measurement and Analysis How many jobs of this type violated the SLA last week? What are the reasons? Where are the bottlenecks within the process? Which teams perfomed best? Best practice identified IDS Scheer AG 14

15 Business Process Excellence is the Basis for Improved Business Performance Cost reduction Optimize Sales Efficiency Transparent Tracking Status Reduced Delivery Times Increase Collaboration Objectives Open Orders Delivery Time Open Invoice Rate Contact Efficiency Cost of Sales Order Change Rate Customer Satisfaction Index Leading indicators Income Statement of the United Motors Group for the 2007 financial year EUR billion Revenue 21,530 Cost of sales 16,150 Gross profit 5,380 Distribution costs 1,530 Research + Development costs 1,200 Administrative expenses 220 Profit 2,430 Margin 11,29 % Business Performance Revenue EBIT Cash Flow Profit Margin Lagging indicators IDS Scheer AG 15

16 Process Intelligence Must Deliver the Missing Visibility Transparency for the middle of executed processes Process Owner s perspective: (process operations) Process performance indicators (leading) (times, cost, risks, volume, quality/completeness, stability/adherence to standards) Need for process transparency from end to end Proactively control processes Objectively measure processes Waiting times Organizational breaks Avoid bad results an early stage Customer s expectation (process input) Customer s perspective (process output) Sales Logistics FI / CO Start Create Order CRM Ship Goods ERP Send Invoice FI/CO End On time In full Too late Incomplete Business goals System breaks Media breaks Organization (inside the tube ) Key performance indicators (lagging/delayed) IDS Scheer AG 16

17 How Process Intelligence & Performance Management closes the Life Cycle of a holistic Business Process Management Business Process Strategy Business objectives Business Process Design Modeled process Fulfillment of process goals Devations to to process standards Executed process Business Process Controlling Gaps in utlizing IT investments Implemented process Business Process Implementation IDS Scheer AG 17

18 Process-driven Requirements Ensures Consistency From Objectives to End-to-End Business Processes Strategy Design Business Segment Matrix United Motors Group Business Segments UMG Group Performance Indicators United Motors Group Reduce sales order cycle times Last change: Type: KPI allocation UMG.cross United Motors Automotive Engineering United Motors Car Rental Which business area has to fulfill which objectives? Increase sales processes efficiency Which indicators can calculated by which measure- Process started ment points? Sales order cycle time Process ended UMG.family Business Objectives United Motors Group End-to to-end Process United Motors Group Order-to-Cash Direct Sales (measurable) Last change: :41:02 Type: EPC (column display) Strategic goals UMG.cross Increase efficiency Become market leader Which objectives can Increase be measured by turnover which indicators? Contract has to be created Create contract Sales Dealership Process started Quotation has to be created Create quotation Contract has to be created Create contract Distribution Center Which end-to-end process can be evaluated by which measurement points? Increase sales processes efficiency Customer order has to be created Contract created IDS Scheer AG 18

19 Process-oriented Implementation of a Performance Measurement & Analysis Solution Objectives and Process Performance Indicators IT-supported measurable End-to to-end Process Process Performance Management in Operations System Implementation IDS Scheer AG

20 Measurement Points in End-to-End Processes Request decided for the registrar not O.K. deciding who informs the claimant Module 1 decided not for the registrar checking calculations of interest O.K. calculations checked but not verified checking calculation of costs Process Controlling informing the claimant registrar asking claimant to adjust the application within 4 weeks registrar gives writing office order to compose a letter issueing payment order informing the defendand about his options letter composed claimant informed and asked writing office transmitting the letter and order to the courts office payment order isssued defendand informed transmitted to the courts office giving order to the courts office to serve payment order registrar adding the order to the file courts office transmitting the letter to the post office order given order not given Module 2 order added letter transmitted comissioning to serve the payment order sending objection to the post office defendand sending letter to claimant served by the post served by the police objection received by the post office letter sent to claimant sending objection to the courts office post office checking if serving was successful objection sent Order incorrect/incompl ete document giving order to demand a informing the repeated serving parties (module1) to the post order given parties informed registrar serving has not been possible informing claimant&ask him to adjust the direction of the defendand within 3weeks using Module 1! successful transmitting the serving document to the court serving document transmitted adding objection to the file objection added courts office informing claimant about objection and his options to react (Module1) transmitting objection to registrar transmitted to registrar registrar order 5128 executing the procedure procedure has finished claimant informed examining the serving document serving document examined registrar claimant informed checking if claimant wants to engage the ordinary legal procedure yes no arranging the archiving of the file registrar arranged applying for the divesture to the judge claimant paying the costs for an ordinary procedure issueing the enforcement order upon application of the claimant (Module2) registrar issueing a executed copy declaration about all payments archiving the file courts office applied costs payed enforcement issued executed copy issued file archived transfering the procedure to the competent court giving an order to inform the central costs office to send him the file registrar checking if application is conform to the time limit checking if file is archived three years transfered order given Payment no yes destructing all costituent parts of the file except for the enforcement order destructed signalizing on the file if executed doc has been issued signalized no request of claimant informing the parties about the transfer (Module1) parties informed check if procedure should be transferred to other court upon request of claimant request of claimant informing defendand about registrar the request (Module 1) sending file to claimant sent to claimant executing the file file was executed sending back the file to courts office cost office claimant not O.K. registrar O.K. arranging the serving procedure serving procedure arranged ARIS PPM Process Warehouse destroying the whole file after 30years defendand informed file received in courts office file destroyed after 30 years asking if defendand agrees (Module2) defendand agrees to transfer to another court defendand agrees not IDS Scheer AG

21 Automated Process Discovery of As-Is Processes ARIS PPM Create Offer Collect Order Data Create Delivery note Compile Bill Check Payment Field staff Office employee Clerk Clerk Clerk Inquiry Offer Assignment Shipping order Billing Payment receipt Time Extractor Extractor Extractor CRM ERP FI/CO 21

22 Account Team informs Manager of major project SDH PM not required (End) Route not investigated Validation job generated on CMC queue Links Issuer Enter Order & JC Order Validation Inform Sales New quote request from PM New quote request from Missing information customer passed to NSD (End) Route not investigated Manager informed of major project from other Customer request (major project) NJRA closed Links Issuer Enters Order & NTE Task Missing information received (JC) Links Issuer chase missing info & JC Order Validation Missing information request (JC) Links chase missing info & order validation Issuer chases missing info PM reports Project Status SE Capture Order CRF completed and Links SE Capture Order & Issuer Enter Order Issuer Enter Order Links JC Order Validation & NTE allocation 601 task to Wideband planner Pass Missing information Links Issuer Enter Order & Search for Y Code JC order NJRA closed Decide no new orders required Dead end to Issuer Response filed Dead end Missing information request (Issuer) Links Issuer Enter Order & SE Resolves Links Issuer chase missing info & WBP Site survey &WI Relevant NSD informed of new proj order (Link) Links Queue Manager selects NTE & Route/Assign Glasgow Links refer costing to customer & cancel order Links WBP Site Survey & Issuer chase missing Info Order Cancel order End Links SE Resolves & Issuer Enters Order Re-Issue 601 Task to WBP Links JC Order Validation & Search for Y Code Input from Account Team Receive Requirement generated as result of capacity Links PM Plans Customer Requirements Links Search for Y Code & Q Mgr selects NTE Task A29/O532/O530 Links Issuer chase missing info & WBP Site Survey & SE Capture Order Missing information not available (WBP) customer plans PM Plans Customer Requirements SE Resolves Missing info received Link to internal/ external work groups - not modelled Missing information request (WBP) New job in queue Y Code Search Slough/ London Links Search for Y Code & NTE Task Info sent to internal/external Links WBP Site Survey & SE Refer Costing to Customer workpacks New Job in queue Ancillary cost info to SE SE refer Costing to Customer Customer confirm information to Wideband Links SE refer costings to customer & WBP Site Survey Link not Modelled/investigated Route, Assign & config 2Mbit Circuits Other output tbc WBP Site Survey Scheme referred to NSD NTE Tasks (129/532) London/Glasgow Links WBP Site Survey & Issue RF's & JC Respond to CREP Task called to issuer Issuer chooses to ignore so not modelled Input not Modelled Incoming call from field engineer R&A task com'd Link to COSMOSS glue and Config circuit 154 Task live (Link) JC Respond to CREP Decide to place order with tactical planner Links PM plans Customer Reqs & Tactical Planning 154 at COM Ready to CREP Links JC responds to CREP & Issue RF's Glasgow Scheme installed & commisioned Links Supervise External /Contractor & Integrate Schemes Integrate Schemes CONF Live Links Integrate Schemes & Configure Circuit/Resolve Problems Feed into COSMOSS statistics - Dead end Links NTE Tasks & WBP Site Survey Configure Circuit Resolve End of Process Problems Links WBP Site Survey & NSD Job Selection & Clean 010/O534 live (Link) Links NTE Tasks (No Y Code) & JC Analyse Delay Order in Job Controller's Queue (Link) Job delayed Links WBP Site Survey & JC Analyse Delay Links NSD Route/Assign & JC Respond to CREP CREP complete Links Issue RF Glasgow & Allocate COW CDD amended WNEX live after JC amend CDD Issue RFs Glasgow/ London 198/O912 complete Allocate CoW London / Sheffield Ready for installation Links Allocate COW & COW supervise external works Supervise Equipment not delivered Not Modelled at Present - Non Fluid Process Scheme referred to CSP Integrate scheme and Tactical planning eepcs WNEX task is triggered by COSMOSS, once all other tasks have been completed CDD can't NSD Q Manager chase missing info/clean data Glasgow Job assigned to NSD (Link) Links NSD Job Selection/Clean & NSD Route /Assign RF prepared (Link) Feed into COSMOSS statistics - dead end Links Issue RF's & Route & Assign NSD Route INJC in JCs queue (Link) Links NSD Job selection/clean & JC Analyse delay Links WBP Site Survey & Issue RF's Glasgow SDH2C form sent to NSD (Link) Capacity problem raised Links Route/Assign & JC Analyse delay Links Supervise External Works/Contractor & IM facilities decisions INJC in JCs queue (Link) Job returned to queue man (Link) Dead end - route not investigated Dead end - route not investigated Dead end - route not investigated Dead end - route not investigated Links Route/Assign & Queue Manager Chases missing details Links JC analyse delay & WBP Progress info passed to WBP Progress info passed to NSD Progress info passed to PM Progress info passed to CSM 601 Task INAC task live Links JC analyse delay & SE responds to Customer JC Analyse Delay Dead end SE respond to Customer Progress update to SE Links SE analyse delay & JC analyse delay RF's sent for Financial authorisation Out of Scope - not Modelled Ready for installation Links Supervise Contract & COW supervise External Works Route not investigated Delay enquiry from customer SE Analyse Delay Progress request to JC (SE) Links Supervise contract & Tactical Planning Solution Planning Links Detailed Planning & Supervise Contract Requires further Investigation Form sent from Oswestry Capacity Managment Tactical Planning RFs sent to CSP Contracts Supervise DL proact job on queue Detailed Planning Proact job complete Links to External Works carrying out DL works Requires further Investigation IM Facilities Decisions SDH23 received Not modelled Requires further Investigation IM Plan Sites for Capacity Requires further Investigation Budget Process Discovery As-Modeled Process documented As-Executed Process actually performed Customer Request 0.50 Day(s) Raise Customer Order Front Office Order being processed 0.50 Day(s) 0.50 Day(s) Job Control CSPC Term Point Allocation Wideband Planner NJRA Job Control Initiated A601 Term point Allocation complete 2.00 Day(s) 0532 Identification of Customer SDH and Parenting Network Solution Design Customer SDH and Parenting identified 4.00 Day(s) 0534 Identification of Core Network Capacity Network Solution Design Routing and Assignment of Circuit Complete 0.50 Day(s) Determine Service Delivery Date CSPC CREP Service Delivery Date Determined 0.50 Day(s) Review Order Requirements CWPC 0680 Order Requirements Reviewed Call Customer Front Office CALL Customer Call Complete Day(s) 0630 Build Core Network Network Solution Design Core Network Built 3.00 Day(s) Configure Service NOU CONF Service Configuration Complete Company 0.50 Day(s) Report Service Order Complete CWPC WNEX Service Completion Reported 1.00 Day(s) HAND 0.50 Day(s) COMP Handover Service to Customer Handover Complete Project managers Service Completion Monitor Service Completion being Monitored Front Office CWPC System administrators Project administrators Method consultants ARIS modelers Process owners Service providers Times Costs Quantities Risks +Chances

23 Process Intelligence: A Unique Root Cause Analysis Trend analyses Statistical distribution Indicators What? How? Who? Why? Influence factors Organization & Communication Process chains

24 ARIS Process Performance Manager... is a patented client/server software, that automatically captures and visualizes living business processes, measures and analyzes process performance and uncovers behavior patterns in organizational structures. Intuitive Performance Cockpits for C-level management Process-oriented perspective for BI solutions Automatically captured graphical process instances Easily identified improvements with process structures Consistent analysis of communication and organization Near-time measurement of finished processes Automatic runtime data extraction out of IT systems Preconfigured industry solutions Scalable and web-based architecture Fully integrated into ARIS Platform Intuitive user interface 250+ installations worldwide Business processes live and in color IDS Scheer AG 24

25 From Where am I? to How did I get here? HOW MUCH? Distribution? Performance analysis reveals amount and influencing factors of the performance gaps WHERE and WHY? WHO with WHOM? The Dashboard displays performance gaps and triggers a drill-down for further analyses Process analysis uncovers the defects in the process flow and organizational structures IDS Scheer AG 25

26 Sales Management View Six Six Sigma Sigma analysis analysis fully integrated in fully integrated in process process landscape landscape Minitab Minitab analysis analysis and and charts charts integrated integrated in in ARIS ARIS Dashboard Dashboard Continuous measurement measurement of of processes processes Automatic update update of of charts charts with with new new data data Support Support for for black black belts belts and and process process owner owner Minitab results available in Minitab results available in ARIS Performance ARIS Performance Dashboard Dashboard

27 Root Cause Analysis by Process Mining How to find the relevant information?

28 Analyzing the Sales Process Flow From the list of all process instances (orders) of dealer San Francisco each order can be reviewed step by step in process models Each process model is automatically captured based on extracted IT runtime data and has an individual process flow according to the sequence of executed functions, which are representing the defined measurement points

29 Visualization of Aggregated Process Instances Discovered Aggregated Process Model (automatically) Change order IDS Scheer AG

30 Detecting the Root-cause in the Process Structures Filtering only on the long running orders of dealer San Francisco will focus on the unacceptable orders Aggregating these cases into one process model reveals a process defect The process flow of most orders is not following the process standard but processed order changes resulting in unacceptable high process cycle times

31 Identifying the Best Practice from the Best Performer Filtering on the best performer, the fastest dealer Dallas, and aggregating all its orders proofs alignment to the to the process standard: Straight forward processing perfect orders in time and without changes This best practice will be the basis for a process improvement project

32 Analyzing Operational Process Structures: Revealing the responsibilities as process defects Best Practice Region A Benchmarking on activity level Worst Performer Region B Performance gaps detected in benchmarking Best performance due to lean process flow Process defects identified as bottlenecks Internal benchmarking the process performance distinguishes between best and worst performer The explanation why the performance results differ is revealed in the automatically captured process flows of both parties One proves lean process flow while the other shows process defects

33 ARIS Solution for Process Intelligence & Performance Management Reliable link between my strategic objectives and the measurable end-to-end processes Improved operational excellence by a permanent support of an automated process performance measurement system Full transparency in the operational end-to-end processes linked with the involved contributors and spanning across the IT systems supporting the process execution Intuitively identified process defects and best practices based on the automatically captured process models Up-to-date information base for continuously improving the executed business processes IDS Scheer AG 33

34 Process Intelligence for the Entire Business Management Process Owner Process Staff STRATEGIC OPERATIONAL TACTICAL Alerts ARIS Performance Dashboard Performance Measurement + Process Discovery Business Events Exceptions & Alerts Real-time Process Instances Business Performance

35 Strategy Operations ARIS Makes Strategy Operational.. Command & Control