How to restore business in process management. Business Process

How to restore business in
process management.
Business
Process
Management
System
The following presentation will introduce BPMS as a new paradigm in
information systems.
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What is Business Process ?
Traditional Structure
Business process
Business process is a coordinated and standardized flow of activities
performed by people or machines, which can traverse functional or
departmental boundaries to achieve a business objective that creates value
for internal or external customers.
(Chang,J.-2006)
The traditional structure of companies as functional silo of activities has been
challenged since the 90’s by a new approach : the Business Process.
The basis of BP is to recognise that activities in companies goes across
functions and use various resources to reach the objective. For example the
customer relation is no more the role of sales but it needs also the input of
various department like supply chain, finance etc..
In addition, the business evolve constantly and organisation and process
needs to evolve with it.
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Evolution of concepts
Business
Information
systems
•Taylor
•ODBC
•TQM
•ERP,CRM,EAI
•BPR
•WfMS, SOA
BPMS
BPMS is coming from two different evolution of concepts.
On the information systems, the original DB systems made to store data has
evolved to workflow management system able to automate information
exchanges and workflow. It generates ERP, MRP and CRM systems. The
last technical step has been the Service orientated Architecture which tried
to integrate the different IT resources in order for them to communicate. (
http,XML for exemple)
On the business side, from the Taylorism, organisation introduced TQM and,
during the 90’s, the Business Process Reengineering but the BPR failed
because of the technology unable to be flexible enough. The ERP/MRP
system blocked organisation into the “best practice” organisation type with
lots of difficulties to evolve.
The BPMS is the technology which enable the BPR vision to be applicable. It
does effectively allow business process to be implemented, and changed by
using flexible technology. BPMS is not only an interface between IT system
but a real tools for BP development.
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Organisation shift
Strategic
Management
Operational
R&D
input
Organisation
Information
Architecture
Knowledge
Process
output
Sales Finance HR
HardwareSoftware Data Network
IT
Infrastructure
Strategic
HardwareSoftware Data Network
Management
Knowledge
R&D
Sales Finance HR
Operational
The real challenge of BPMS is to change the organisation to a business
process organisation.
It means mainly that organisation needs to think in terms of
process instead of function
process will use function and data to produce the needed
output
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IT System Architecture
ERP
ERP
BI
Supply chain
Management
BI
CRM
BPM process layer
Supply chain
Management
Warehouse
Management
Accounting &
financial system
Accounting &
financial system
Warehouse
Management
CRM
In the technology point of view, the BPMS will make the integration of
various IT resources in order to make process easy to manage without
redesigning each system.
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Contents
„
„
„
What is BPMS ?
Why BPMS will benefit an organisation ?
What should be done to implement BPMS ?
The objective of the assignment will be :
- To define what is BPMS
- To explain what benefit organisation can expect from a BPMS
- To review from various experiences what should be done to
effectively implement a BPMS
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Liverpool John Moores University
Faculty of Business and Law
Executive Master of Business Administration
Student Information
Emmanuel DUPUIS
MGTEDUPU
ID : 314553
MANAGING INFORMATION
MGTMEM010
24/04/2007
(2948 words)
12 pages + Bibliography
Table of contents
1. Introduction
2. Literature
3. Benefits of BPMS
4. Business case – illustration
a. Background
b. Key drivers and issues
c. Method
d. BPM Approach
e. Technical Approach
f. Results
g. Comments
5. Conclusion
6. Reflective learning
7. Bibliography
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How to restore business in process management ?
“Something different is happening in the world of process..”(Ould,2004).
Process has been referred to in the past as the way things were done within
an organisation. In the best-case scenario, processes were described using
flowcharts and procedure manuals in an effort to standardize the operations.
During the 90’s, a new science imposed its view by “re-engineering” the
processes of an organisation. Driven by information system engineers, the
“Business Process Re-engineering” movement cemented business processes
into information workflow systems. Enterprises came under the control of ERP
(Enterprise Resource Planning) systems defined as embodying “best
practices”, but these systems proved themselves incapable of evolving
according to the needs of the company. The process becomes a victim of the
“information” (Ould, 2006). Since then, the BPR (Business Process
Reengineering) movement has found a re-birth in the need for companies to
adapt more effectively to changing market conditions. Business Process
Management becomes the new standard as a management approach to
redesign organisations, and this leads to the new technology: BPMS
(Business Process Management System).
The paper presents a literature review on BPMS, the origin of BPMS (i.e. what
it is and where it comes from) and the benefits that can be expected from it. In
addition, a business case of an American Health insurance company is used
to show a real experience of implementation of BPMS. It describes the project
and the benefits that the organisation realised from it. Finally, the case study
attempts to review the key success factors that can make a BPMS
implementation a true success for organisations, and mentions the key actors
in the field of BPMS.
Literature review.
After Taylor’s (1911) revolution, process management focused on improving
the efficiency of organisations by automatisation and division of labour in
order to produce more at lower cost. It is only during the last part of the XXth
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century that organisations started to focus on the effectiveness and efficiency
of their processes. During the 1940’s Deming (1994) introduced the notion of
TQM (Total Quality Management) as best practice, which started to be
implemented only during the 80’s. This sparked a revolution in organisations
that started to focus on long term quality versus short term productivity
(Chang,2006). Another revolution occurred in 1982 with the publication of “In
Search of Excellence” (Peters and Waterman, 1982). BPR (Business Process
Reengineering) started to be recommended for organisation to achieve
operational excellence. Yet, Hammer (1993) the father of BPR recognised
that BPR did not fully deliver on the promise. Nevertheless, Porter (1994)
highlighted the importance of processes in the “value chain” on the creation of
value. “Activities, …, are the basics of competitive advantage.” (Porter, 1996).
Since then, Business Process Management has been a constant subject of
discussion for continuous improvement. Adoption of BPM by organisations
has given rise to great interest in the technologies that make it possible
(Chang,2006). Indeed, IT solutions have been continuously evolving from
ODBC (Open DataBase Connectivity) to ERP/CRM (Customer Relationship
Management) to BPMS.
BPMS is the term used to describe the family of technologies that have
emerged in response to the BPM movement. BPMS is a new class of
software that allows organisations to design and manage processes. (Chang,
2006). BPMS is a bridge technology between existing information technology
and business process owners. A business process is a socio-technical
system, executed by humans and machines, and a BPMS is purely a
technical system. For a traditional IT system to be improved or to evolve, IT
analysts will be using the traditional waterfall project implementation
methodology to modify it. Functional specifications would be defined with the
process owner. Then, the technical analyst would configure the system
accordingly and, if needed, they would develop specific system interfaces to
exchange information with disparate applications. The implementation
process would thus take time and often by the time the solution is in place, the
business needs would have changed again. Where previously development or
evolution of IT was managed by system-analysts, BPMS allows the business
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owner to adapt their own processes, and to test them without making long and
complex modifications to traditionally coded systems.
BPMS is the direct legacy of WfMS (Workflow Management System) popular
in the 90’s (Shaw, 2007). “Just as relational database management systems
supported the aggregation of business data and the creation of enterprise
data models, a BPMS achieves the same for business processes” (Smith and
Fingar, 2003, p. 15).
But where WfMS was viewing processes as tasks that humans were
performing, BPMS is process oriented designed. BPMS offers the classic
WfMS facilities, but enhances them to integrate the process decision and to
offer the simulation of process in order to improve it. (Chang, 2006)
Benefits of BPMS
BPMS technologies can be very beneficial to companies in terms of reducing
project lead times, reducing hand-off errors and offering increased flexibility to
adapt systems to ever-changing business needs (Reijers, 2006). The
implementation of BPM is a logical progression of TQM (Pritchard,1999)
whereas the BPMS is only the technology to achieve it. The main drivers for
an organisation to go the BPM route are the needs to improve
responsiveness, the threat of competition, and the need to improve quality.
This leads to the following benefits: improved relationships with customers,
better cross-functional working and change in organisational culture
(Pritchard, 1999). However, in order to gain maximum advantage from BPMS
technologies, the organization must become more process-oriented (Parkes,
2002). Otherwise, people may remain in their functional silos, resisting
change. Process orientation is an essential ingredient for successful process
re-design and re-engineering efforts to implement BPMS (Hammer, 1993).
In addition to the business side, BPMS technology can improve the value of
the organisation. Traditional IT technologies were based on data and
applications merged together. Departments were relying on incompatible
information systems. Workflow management and ERP have separated data
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from applications and transform that data into a corporate asset. The benefit
of those systems was to make normalized data available to the entire
organisation. Similarly, BPMS technologies have extracted business rules and
business processes out of the IT application, thereby exposing these rules
and processes as corporate assets (Pegasystem,2006; Chang, 2006). This is
illustrated in figure 1
Figure 1 – Courtesy of Pegasystems, Inc
Business case – illustration
Background
The organisation, that we will name “RIS” to keep confidentiality, is a health
insurance company part of a corporation network. Their core business is to
provide the interface between their “members” (clients) and their “providers”
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(doctors, hospitals etc.). They have 1100 employees and 700 000 members.
Their vision is “To improve the quality of life of our customers and of the
people of the area by improving their health”. And they include in their mission
statement: “Promote a coherent, integrated, and efficient state wide
healthcare system that meets the needs of .. residents”
Before the start of the project, RIS was organised in silo by department where
people were focusing internally on their scope of work, and were unable to
work across departments effectively. Procedures were inconsistent and
inefficient for providers (physicians and hospitals). No metrics were in place to
measure individual performances. Members and providers were unsatisfied
with the service levels provided to them.
Key drivers and issues
In 2002 RIS started a project to implement a BPMS into their organisation in
order to strengthen their financial stability, achieve enrolment objectives,
simplify processes and make service a differentiating value. In addition, they
wanted to improve the health of the people served by using the 900 000
contacts per year to be proactive in promoting health programs. They wanted
to be more responsive and more accurate in their member and provider’s
communications.
Organisational issues were as follows :
Business processes:
-
Inconsistence of data between departments
-
Workflow requires manual handling
-
No automation of members’ requested tasks.
-
Multi-IT system with no single view across departments
Application :
-
Multi-IT system to collect various data
-
Application required long learning to be used
-
IT system not organised to support streamlined business process
Metrics :
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-
No possibility for failure analysis
-
Long resolution time for members
-
Single contact can’t see broad pictures quickly
-
IT needs to produce reports
Method
They entered into a two-year initiative to implement and reorganise their
customer service operation. The first year was focused on selecting the right
BPMS vendor/partner and setting up the organisation in order to realise these
objectives. The second year was spent in system implementation and rollout.
During this period, they also changed their “core” mainframe system from a
“built in house” to an industry standard membership and billing system. They
reviewed all their business processes in order for the customer representative
to be the real interface between members and providers. The audit and
analysis their business processes were conducted in cooperation with
Pegasystems (the selected BPMS vendor, who had significant experience in
the field of health insurance process re-engineering). They implemented an
overlay of BPMS in 7 months using an iterative project methodology where
functionalities were implemented in iterative releases along the way.
Previously, Customer Service Representatives (CSRs) were extensively
trained to handle processes from start to finish on a bespoke IT system
capable only of bringing all information needed to a set of rudimentary
mainframe screens, requiring the human actor to manage access to legacy
systems. The BPMS overlay system allowed the CSRs to follow “intelligent”
process flows with “intent-led” screens, which helped them to bring the client‘s
interaction to the centre of the organisation.
BPM Approach
The BPM exercise was conducted by the BPMS supplier;. The approach of
analysing and reviewing processes helped the organisation to adopt best
practice processes and on the other hand, the supplier was involved into
process development from the beginning. The BPM project was part of a
three-year strategic business plan. Management increased their span of
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control to ensure proper oversight of productivity. They developed a quality
assurance program to monitor interactions with customers. They established
a more effective and efficient training department and changed the culture to
transform the call centre into a customer centric organisation
Technical Approach
The organisation was running an in-house mainframe system based on a
bespoke membership and billing database model. They were facing issues in
terms of data exchange between departments, and compatibility of systems.
The vast majority of workflows were performed entirely manually.
Technical changes were made on the mainframe system to evolve from an
internally developed system into a more standardised system (they
standardised both their systems and databases). At the same time, they
started the implementation of the BPMS. The iteration method was used due
to the requested project implementation timeline (7 months), and because of
the large number of pre-built processes available from the supplier. Indeed, in
7 months, 80% of the processes and business rules were coded and
customised to fit the needs of the organisation. Two phases were ultimately
developed; phase I was deployed in 7 months to automate the CSR’s
(Customer Service Representatives) members services interactions. The
second phase took the same amount of time, and resulted in the
implementation of the CSR’s interface with providers, as well as handling
grievances/appeals.
Results
In two years, they achieved the following:
Ability to perform root cause analysis of issues generating calls to the
Service Centre and quickly resolve potential problems.
Improve accuracy of information communicated to customers
Service representative able to access all necessary data from a single
application - the new information system (BPMS) performs the search
for information in the back end systems and presents it to the desktop
in a user-friendly fashion
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Improve inquiry timeliness for responses from external departments to
avoid repeat calls
Empowerment of Service Representative to resolve inquiries on first
contact
Improve Service Representative’s productivity; eliminating the need to
navigate multiple back end systems
The application provides them with the opportunity to educate
customers about health and wellness programs offered through
automated workflows build in to the application
Specific metrics in place for improvement monitoring:
-
Root cause analysis
-
Call handle time reduced by 120 sec ( on 10 min average calls)
-
Customer Service Representative training reduced from 10 weeks
to 8 weeks
-
Members satisfaction rate improved from 80% to 85%
-
Inquiry accuracy increased from 97% to 99%
-
1st call resolution from nowhere to 85%
The project was qualified as a “winner” by the CIO.
Comments
Two main comments were made at the end of the project, between the
organisation and the BPMS supplier. First, the latter admitted that iteration
methods of information system implementation needs to be clearly explained
and defined, as most organisations are accustomed only to waterfall project
implementation methodologies. Users tend to expect too much from the initial
application rollout, where 70-80% of the tasks are covered and 20-30% of
exceptions still need to be handled outside of the system during the time of
development. Second, it has been recognised that the concomitant BPM
process and the change of the IT system ( mainframe ) increased the overall
risk profile of the integrated IT program, even though they ultimately
succeeded in driving the two changes successfully to completion. The
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supplier now recommends that changes of this magnitude be conducted in
two different steps. Third, the selection of the right BPMS provider is key to
the success of the project. Indeed, the choice of Pegasystems was driven not
only by the fact the system was fully integrated, but also by the experience
they had in the business field and the “ready to use” business rules they were
able to provide.
Conclusion
BPMS is only a piece of software that support modelling, enactment and
analysis of business processes (Reijers,2006). The critical success factors of
BPMS implementations remain the Business Process Management (BPM)
and the change that the organisation is ready to assimilate. ”Key
considerations in the deployment of a BPM approach include the clear
articulation of BPM intentions, the link between BPM and strategic
programmes, the acquisition of process competencies, skills and knowledge,
and the willingness to address human resource issues as part of an overall
BPM initiative (Pritchard,1999). BPMS extends the WfMS capability to support
the company in its evolution to “process orientation”. Research suggests that
the reasons for the failure of BPMS projects are similar to those undermining
business process reengineering projects, e.g. poor change management,
resistance from rigid bureaucratic organizations, and lack of sustained top
management support (Reijers, 2006).
Process orientation is considered as an essential ingredient for success and
can have
a direct effect on
customer satisfaction. (Hammer and
Champy,1993).
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Bibliography:
Chang, J. (2006), “Business process management systems”, Auerback publications
Deming, W.E. (1994), Report card on TQM, Management Review, January: 22-25
Hammer, M. (1990), “Reengineering work: don’t automate, Obliterate”, Harvard
Business Review, July-August, pp 104-112
Hammer, M. and Champy, J. (1993), Re-engineering the Corporation, Nicolas
Brealey, London.
Khoshafian, S. (2006),Change and Innovation in Service Oriented Enterprises,
Pegasystems
Ould, M.A. (2005), “Business process management”, BCS
Parkes, A. (2002), “Critical success factors in workflow implementation”, Proceedings
of the 6th Pacific Asia Conference on Information Systems, Jasmin, Tokyo, pp. 36380.
Peters, T. (1995), In search of excellence – Lessons from America’s best-run
companies. HarperCollins Business. London.
Porter, M.E. (1985/1999), Competitive Advantage, The Free Press, New York, NY.
Pritchard, JP. & Armistead, C. (1999), Business process management : lessons from
European business, Business Process Management Journal, Vol. 5 No. 1, pp. 10-32.
Reijers, H. (2006), “Implementing BPM systems : the role of process orientation”,
Business process management journal, vol 12, No4, pp 389-409
Shaw, D. & Al. (2007), Elements of a business process management system: theory
and practice Business process management system, Business Process Management
Journal, Vol. 13 No. 1, pp. 91-107
Smith, H. and Fingar, P. (2003), Business process management: The third wave,
Meghan-kiffer Press, Tampa, Florida.
Taylor, F.W. (1917), “The principles of scientific management”, Harper & Brothers
Publishers, New York / Unabridged Dover (1998)
Websites :
www.bpm.com
www.gartner.com
www.pega.com
Acknowledgements:
Special thanks to Jim SALEH from PEGASYSTEMS Inc for the information about the
business case and for his help to understand this subject.
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