business transformation with_bpm_manila_apr-2013

© 2013 IBM Corporation

IBM Business Process Management

Create more ValueTransform your Business Processes NOW!Logan VadiveluDistinguished Chief Architect IBM Growth Market Technical Leader – BPM

SAP [email protected]



Agenda

A. Role of Process Innovation within organizations

B. Collaboration between Business and IT

C. Best practices for operationalizing process innovation and measuring ROI

4 © 2013 IBM Corporation


BPM Drivers

New Intelligence

New Intelligence

How can we take advantage of the

wealth of information

available in real time from a multitude of

sources to make more intelligent

choices?

Customers expect us to know them

I Need InsightI Need Insight

SmartWork

SmartWork

How can we work smarter,

supported by flexible and

maintainable processes

modeled for the new ways people buy, live & work?

Business demands more efficiency

I Need to Optimize

I Need to Optimize

Dynamic Infrastructure

Dynamic Infrastructure

How do we create an infrastructure that drives down cost, is intelligent and secure, and is

as dynamic as today’s business

climate ?

Core systems cannot adapt to changes

I Need to Respond Quickly

I Need to Respond Quickly

Risk Management

Risk Management

Standardization and regulation is coming

I Need to comply

I Need to comply

How can we establish risk management

controls that will ensure compliance in an ever-changing

and developing environment?



Process improvement is of utmost importance

McKinsey 2011 Technology Survey of 927 IT and non-IT Executives, December 2011

https://www.mckinseyquarterly.com/High_Tech/Strategy_Analysis/A_rising_role_for_IT_McKinsey_Global_Survey_results_2900



Flexible integration interconnects applications and services across the organization

Business rules and analytics provide flexibility for repeatable decisions that change frequently

Processes can mix structuredand unstructured activities, according to business needs

Building Blocks to Achieve Process InnovationEmpowering business and IT users to easily manage change



Business Model Innovation (dynamic ecosystems)

Industrialisation

Business Performance Optimisation

Innovation•Go to market•Customer centricity•Personalisation•Product provision

Process Factory •Economies of scale•Asset reuse •Configure not build•Cloud delivery

COE*

GovernanceFrameworks and Industry

Standards

Component Business ModelsGovernance

Automation•Visibility / analytics•Lean six sigma•Fraud, compliance•Efficiency, STP

* COE = Centre of Excellent

Governance

Fitted into an overall Business Performance OptimisationFramework



Business Model Innovation Focus

Level 2-Industrialise and automate the workflow

Level 3- The business has end-to-end process control with full visibility

Level 5 - Ability to rapidly innovate the business model

Level 4 - Componentise the end-to-end process to allow for reuse, standardisation innovation & operating model consolidation

Level 1- Early digitisation of work allows workflow

AGILITY

BPM ADOPTION

IndustrialiseFocus %

Business ModelInnovationFocus %

Most clients are at L1/L2 pushing for L3 - end-to-end process integration

Leading and innovative organisations e.g. in

Telecoms and mediaInfrastructure utilities,

transport Central government

have the vision and imperative to push for L4/L5

Note – this is intended to align to the BP(S)O maturity model

% Focussplit

High % focuson Industrialisation

High % focus on business model innovation



Go-to-MarketDynamic pricingLeverage customer insights for target marketing

Order to CashAccount opening process automationAutomated order processing & fulfillment

Product DevelopmentReduce time to market of new products & servicesStreamline production procurement sourcing

Start at the Point of Greatest NeedTypical entry points to achieve process innovation

Insurance Automated claims processing Improved fraud detection

Banking Reduced loan processing times Risk & regulatory compliance

Retail Retail distribution supply chain

automation Customer loyalty programs

Manufacturing Manufacturing production quality and

control Reduced manufacturing production time

Energy & Utilities Power grid management Energy consumption

Travel & Transportation Online ticketing and reservations Travel and hotel pricing management

Healthcare Improved patient care Fitness & nutrition

Government Customs & border control Public safety

9



Business Process Management is a Team Sport!

Business UsersBusiness

Leader

IT Leader

Process Owner

Business Analyst

IT Architect

“How can I work smarter supported by flexible and dynamic processes modeled

for the new way people buy, live &

work?”

understand and define business objectives within the boundaries of the organization constraints

link strategic intents to actionable entities and computable measures

collaborate on the operational aspects of the business to ensure the right actions are being taken

show how Process Engineering efforts are guided by the business strategy and show a clear path from strategy to results

Focus project efforts on the areas and processes that bring the most value to the business



Team Roles



Successful Adoption of BPM Is A Journey for Business & ITCulture, Architectural Alignment, & Market Pressures Impact Adoption

Highly responsive, agile architecture

Faster ROI

Evolution of the Agile EnterpriseEvolution of the Agile Enterprise

Level 1 Level 2 Level 3 Level 4

Gap narrows

Business

Organizational silos with rigid boundaries. Few processes documented, measured. Inconsistent improvement methodology.

Organizational silos with rigid boundaries. Few processes documented, measured. Inconsistent improvement methodology.

ITIT is reactive. The majority of the IT budget is spent on maintaining the status quo. Integration is P2P. Minimal reuse, increasing backlogs.

IT is reactive. The majority of the IT budget is spent on maintaining the status quo. Integration is P2P. Minimal reuse, increasing backlogs.

Some processes documented. Basic measures in place for critical processes. SME-led improvement teams.

Some processes documented. Basic measures in place for critical processes. SME-led improvement teams.

Applications customized to support process change. Project/department-level IT Services developed. Reuse is copy-paste-modify.

Applications customized to support process change. Project/department-level IT Services developed. Reuse is copy-paste-modify.

Processes are modeled, simulated. KPIs and real-time dashboards provide visibility and guide disciplined improvement.

Processes are modeled, simulated. KPIs and real-time dashboards provide visibility and guide disciplined improvement.

Cross business unit BPM/SOA adoption and reuse grows. Business policies are used to manage process variation.

Cross business unit BPM/SOA adoption and reuse grows. Business policies are used to manage process variation.

Enterprise-level BPM/SOA adoption with much higher levels of reuse. Services are assembled dynamically. IT enables business change.

Enterprise-level BPM/SOA adoption with much higher levels of reuse. Services are assembled dynamically. IT enables business change.

Business and IT architectures are linked

Systematic improvement using predictive measures. Business Analysts reuse Services. Process change becomes a key differentiator.

Systematic improvement using predictive measures. Business Analysts reuse Services. Process change becomes a key differentiator.



Agenda






A Business and IT Approach that let's you meet tactical strategic priorities



Agenda






Processes inside applications• Processes are rigid and costly to change• IT changes needed lag far behind• With passage of time, changes may no longer be relevant

Processes that span applications• Any changes have implications across all applications • Inefficient and ineffective processes remain long after the need

for change has been recognized

Managed manual processes• No automation exists to enable on-the-fly process changes• No automation exists to trigger processes based on events or

patterns

Ad-hoc processes• Most systems are not equipped to capture ad-hoc work• Most ad-hoc processes often not tracked or monitored• Costs remain hidden and ad-hoc processes remain ad-hoc

Opportunities for business optimization and business innovation are lost

Challenges of Traditional Process Management



BPM Shifts Development Towards a Business Driven Approach

StrategyMapping

ProcessMapping

ProcessAnalysis

ProcessDevelopment

ProcessMonitoring

ProcessOptimization

PlatformInstall & Config

EnvironmentConfiguration

EnvironmentConfiguration

ProductionTuning

Business Driven Process DesignBusiness Driven Process Design

Infrastructure ActivitiesInfrastructure Activities



Organizations Turn to BPM to Transform the Traditional Development Process

Define, Measure, Analyze Improve Control

No Integrated Operational Control

No Integrated Operational Control

Implementation Highly Variable

Implementation Highly Variable

High Investment –Low Leverage

High Investment –Low Leverage

Process Improvement Disciplines (i.e. Six Sigma)

Solution Development Lifecycle

Analysis, Plan, Design

Code(Buy vs. Build)

Deploy, Maintain

No Systematic Operational Control

No Systematic Operational Control

Rigid knowledge buried deep in codeRigid knowledge

buried deep in codeFunctional Focus vs.

Business ViewFunctional Focus vs.

Business View

Inhibitors to Increased Effectiveness: No direct traceability to business

objectives No integrated measures of success Separation “gap” of business

knowledge from implementation Difficult to communicate and visualize

business impact of change Limited audience can effect change Not oriented towards the needs of

making people more effective: As collaborators and as participants



Productivity Benefits grow with greater process maturity



As Planning Shifts Towards Process ImprovementIdentify the Low Hanging Fruit and Start Small

Scope of first project

Associated with a key, meaningful

initiative

Associated with a key, meaningful

initiative

Simulation may be used to assist with the calculation of payback and positioning

Reengineering project

Never "One and Done"

Use a prioritization matrix early on in your process analysis

effort

Business importance



Productivity Improvements are one of the main reasons clients implement BPM


Pattern Characteristics

1. Human Automation

High emphasis on Human-to-Human interaction

Activities are well understood and the flow is structured

Requires visibility and measurement of human activities

2. STPOptimisation of a process with a key goal to increase the volume of throughput or work completed for that process (STP) System intensive integration, automated process. Transactional integrity is required by the service

3. STP + exception

As per STP but exceptions require human tasks to resolve them

4. “Perfect the instruction”

Cases that have become understood over time. Knowledge has been captured in the technology and the process is now suitable for STP

5. “Case”

Note: People have different definitions of case

- Unstructured or structured events (triggers) OR

- Activities require collaboration OR

- Often undetermined (but not always) OR

- Knowledge intensive OR

- Content (Paper/Image, fax, electronic document … digital image, voice, video …) OR

- Relies on people (sometimes specific expertise) OR

- Persistence (Lifecycle of case)

Productivity benefits also depend on which BPM patterns are required in advancing BPM maturity - with STP offering 100% automation

Content

/ Data

Analytics Mandatory defined activity at any time

Prescribed patternor sequence

Decision Services

Optional definedactivity at any time

Determ

inistic -Managed

Flexible Driven

Information / W

orker

Mgr.Clerk

Auditor

Human centric

Content STP service CaseKey



Efficiency

Saved more than $100M with improved efficiencies and higher

levels of customer service

Effectiveness Agility

Cut “engineering” time of designers on car systems

by 20% in one year.

Take time and cost out of the process

Work smarter to deliver higher revenue and profit

Outmaneuver competitors with rapid response to change

Speed to market gains of over 50%

Reduced development time

by 40%

Drives $3.6M in additional revenue and saves $2.7M by integrated sourcing processes

with real-time inventory visibility

Line of Business Personnel Launch Campaigns in

Two Days Instead of Months

Project Program Transformation

23

BPM delivers increasing business value as adoption progresses



1 to 3 Weeks1 to 3 Weeks 8 to 10 Weeks8 to 10 Weeks 2 to 3 Weeks2 to 3

Weeks1 to 2

Weeks1 to 2

Weeks

TestTest Go LiveGo

Live

• BPM Analyst (1)• Engagement Mgr

(1)• Infr. Specialists (1)

• BPM Analyst (1)• BPM Developer (2)• Engagement Manager (1)

• BPM Analyst (1)• BPM Developer (2)• Technical Architect (1)• Engagement Manager (1)

• BPM Developer (1)• Technical Architect (1)• Engagement Manager (1)• Infrastructure Specialists (1)

DevelopmentDevelopment

InfrastructureInfrastructure

• Environment Install / Config• LDAP integration

Training/ MentoringTraining/ Mentoring

• Deployment scripts/playbook• Production Tuning

•Model Process and Service Flows

•Build UI shells•Create Business

Data model•Prototype

Integrations and DB Design

•Mock up Reports

•Develop Process to specification

• Implement Services with Data Flow and DB layer

• Incorporate integrations

•Generate data to build reports

•Finish remaining 30% of UI functionality with look and feel

•Complete metrics and reports

• Implement exception handling and error proofing

• Goals, Critical Success Factors• As-Is Process Maps• Process Analysis• To-Be Process Maps• Executable BPD• Forms and Custom Reports• KPIs and SLAs• Business Data Model• Simulation

DefinitionDefinition

Quick Win Pilot – Iterative playbacksProven BPM project timeline & roles



Project……..to Program…....to Transformation

Start small, grow fast

Build Project-Based Credibility

1

Establish a Program

2

Transform Across and Beyond the Enterprise

3

25

Use a proven methodology from a trusted partner



26

Create Value – for you and your clients.

Transform your Business Processes. Now.



For example, BPM Agility enables innovation in Business Models for Gridit and the Swedish Pensions Agency (PM)

Group of Telecom network operators who decided to collaborate rather than competeTheir idea is that there is more value in providing and managing digital content passed over a connection than providing the connection itself, which is becoming a commodity They built a business platform to bring network and content providers together to create new content-based offers to consumers

Catalogue

Serviceconsumer

Serviceconsumer

ServiceProvider

ServiceProvider

BusinessPlatform(BPM)

Basic BPM and SOA Vision to supportnew business models at Gridit and PM

Public Sector Agency Recognizes that today’s citizen needs help in managing their whole pension whether provided by the state, employers or private Vision is to build a whole pension platform to integrate this ecosystem to provide whole pension services, that no one can provide today that are aligned to the citizen’s and the state’s fast evolving needs

…. Dynamic ecosystem

IBM internal only


Example 1: Productivity Improvements in Public Sector with BPM and RulesBackground Public Sector organisation Handling large volumes of cases Cases ranging from very simple (STP and STP + Exception

Pattern) to the very complex (human centric and “case”patterns”)

BPM maturity from level 1 to level 3

Issues Unable to ramp up business volumes without increasing

business FTE Risk of failure of end-of-life systems Inflexible systems Manual effort causes high business processing costs Need higher levels of process Automation through Rules and

BPM

Productivity Benefits Target of productivity improvements from 43% (low) to 65%

(high) primarily for easier cases Three-year ROI between 17-80%


Example 1: client starting from level 1 and looking to move to level 3 with BPM and Rules


Example 1: 50% Manual effort is caused by the process and 50% bydata issues, Decision Mgt. (Rules) and BPM can in aggregate increase productivity by between 46-64%

Future phases

Rules improve productivity by 8-

16%Over time rules are built to

increase Automation

Automation improves productivity by 26-

33%

over time e-formelement is achieved

Automation improves productivity by

9-15%

over time e-form is achieved & more

complex processes are automated

Easy cases Complex cases

Process related

Data related

% of FTE

% of Manual Effort

50%*

100%

0%

0% 65% 100%

* source: Head of Dept A

Productivity improvementLow = 43% High = 64%

Example process related –manual effort caused by late validation so errors get into system

Example data related –manual effort caused by complex / many data structures or case specifics


Example 2: Productivity Improvements in Insurance with BPM

Background

Insurance client Human-centric integration pattern Need to grow business in an complex commercial area but underwriting process unable to scale without

significant extra manual effort

Issues

The desire is to achieve this growth with a design headcount of UW. This desire is hampered by the high skew of quote throughput during two peak weeks at the end of quarters. These two weeks handle approximately 35% of the quarterly quotation throughput

The current UW process is highly manual and therefore difficult to scale to achieve this growth within the design headcount. BPM software can automate and optimise the UW process to enable this scaling to take place. BPM will reduce rework and orchestrate integration across multiple back-end systems.

Productivity Benefits

Avoid adding 11 UW by end 3-year to achieve over 100% of plan at slightly under target HC by reducing the effort required for UW managed business by approximately 33-50% for Motor and 15–20% for non motor

3-Yr ROI of 384% (low 246%, high 707%) Net Benefits of £1.5m (Range £1.3m - £1.6m) Breakeven in 10 -15 months


Example 2: The Proposed Solution Moves ABC from a Manual Rekey to a More Controlled and Efficient BPM System

email

ExcelModels

Trading

UWSystems

PaperDocument

System A

Manual re-key

PaperDocument

System A

email

ContentMgr?

12*Brokers 12*Brokers

Automated update

Trading

UW systems

BPM

Single point of user accessMain Opportunity for BPMLess Impact for BPM

ReplaceExcel models

Quotation/DocStandard Quotation/Doc

OutputsReports

As Is To Be


0

20

40

60

80

100

Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11 Q12Peak FTE 2.0 3.0 3.0 4.0 5.0 6.0 6.0 7.0 8.0 9.0 9.0 10.0Extra FTE 1.0 2.0 2.0 3.0 4.0 5.0 5.0 6.0

0

20

40

60

80

100

120

Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11 Q12

Example 2: Motor – BPM avoids the need to add an extra four FTE in order to meet growth targets

“To Be” with BPM

Peak FTE required <4 Peak FTE required < 8 Peak FTE required > 8

Quotes/wk

Quotes/wk

2 Peak weeks perQtr = 35% of quotes

11 Non peak Weeks per Qtr = 65% of quotes

“As Is” Manual Processes Extra FTE

up to design team of 8

BPM enables growth within

Design extra headclount

BPM platformEnables growthWithout need to

Add more UW Headcount 4FTE

More than 8 FTE needed

Peak FTE 2.0 3.0 3.0 3.0 3.0 3.0 4.0 4.0 5.0 5.0 5.0 6.0Extra FTE 1.0 1.0 1.0 2.0



3535

Continuous Process Improvement via Activity MonitoringProcess Visibility Helps Business Leaders Manage & Improve Operations

Identify trends, forecast events, make smart choices

Understand up-to-minute business performance by monitoring KPIs

Detect, respond rapidly to change

Rebalance human workload on the fly

Continuously improve key business processes

Customize dashboards easily



BPM Workshops Overview4/8/2005

Discovery Workshop Itinerary

Day 1

Day 2

Day 3

Business Case Overview

Kick-off and Demo

Results Presentation

Document Findings & Proposed Approach

Approach Evaluation and Selection

Design Possible Approaches

Technology Review

Document Findings

Document Findings

Business Process/Rules

Review

Roadmap and Planning

Prep

Context & Approach Review

Follow-up Discussion

Documentation Review

Tailor Workshop Agenda


Review


Review


Review


Review

Parallel Discovery Tracks



Playback 0

Playback 0

Playback 1

Playback 1

Build from

scratch

Build from

scratch

36



Maturity C

hallengesTechnology

Expertise

Succeed with an Initial Project

Establish a Program

Transform across the enterprise

Identify Business Challenge & Value

On-Demand Consulting AssistanceTurnkeyServices

Solution MentoringTraining

Simplicity to engage business users

Power to scaleas business requires

Realize fast value, foster BPM adoption and create transformational impact

Visibility Rapid timeto value Governance

Understand and document existing processes Identify key improvement

opportunities

Target high return projects

Leverage proven methodologies to ensure success

Increase skillsEstablish CoEOptimize

established projectsExtend to new projects

TransformationProgramProject

Infuse a culture of process across the organization

37

Ensure success with a proven approach for adopting BPM

business transformation with_bpm_manila_apr-2013

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