Operational management

Operational management Dr. Marc Poulin Contact details: Email: marc.poulin@yahoo.com e

Creating operational strategy and Implementing operational change: bpm and bpr

Agenda • Evolution of BPM and BPR BPR • Definitions • Critical elements BPM • Drivers and triggers for BPM • BPM technology • BPM critical success factors • BPM framework

Evolution of BPR and BPM • BPR • Focused on analysis and re-design of business processes • Origins in early 1990s where many large companies initiated reengineering efforts. • BPR also known as business engineering, redesign and business transformation • Famous Michael Hammer claimed: “Don’t automate, obliterate”(1990) • Many publications on BPR, consulting models, and negative view of ‘downsizing’ activity • Accelerations slowed in late 1990s • Evolution to BPM in 2000s • Seen as a follow-up to BPR, considering process and IT • Resembles TQM and other process improvement strategies

Business Process Re-engineering The fundamental rethinking and radical redesign of business processes to bring about dramatic improvements in performance Hammer, M. and Stanton, S. The Reengineering Revolution, Harper Business, 1995. • Quite different then continuous improvement of TQM • IT is used intensively to change processes, not accelerate them Needed when (drivers): • Change in strategy, • Change in technology • Compare organizational structures in past 30 years • Major shift in customer requirements • Speed, customization, cost

BPR key elements • BPR includes the following for each process: • Process ownership • Focus on customer • Adding value to process • Involvement of many functions • IT enabling change • Expert systems (BI), decision support systems • Sharing data, communication networks • Electronic identification and tracking ERP systems would become backbone, many BPR models were developed

BPR challenges • Having clear strategy and customer needs • Long term view must be present to make major changes • Focus on cost, speed, differentiation? • Leadership must be involved • Creating cross-function teams • Process view requires employees from various departments to work together, but who may never have in the past • Need for competence, credibility, leadership, complementary, organization • Include wider variety of members, even outside company • Key are: Upper mngt, IT, Finance, process owner

BPR challenges • Change management • Lots of resistance to new ways, organizational structures, incentives, systems • Company could risk total failure • Legacy IT systems • Changing or implementing ERP systems • New skills, training requirements • High capital investment

BPM • BPM: “Business process management” elements • Structured approach to analyze and continually improve fundamental activities of an organization’s operations. • Customer-focused approach for systematic management, measurement and improvement • Cross-functional teamwork and employee empowerment • BPM does not automatically equate to technology “The achievement of an organization’s objectives through the improvement, managementand control of essential business processes.” (Jeston and Nelis, 2008)

BPM framework BPM is an evolution from BPR where changes are gradual, with emphasis on process change, not IT. BPM is a framework on how to implement change. A popular model is the 10 phase model illustrated by the figure on the right. (Jeston and Nelis, 2008)

Framework Components

Drivers of BPM A list of the 7 driver and trigger categories: • Organization • Management • Employees • Customer/Suppliers/Partners • Products and Services • Processes • Information technology There is no recipe of when to start BPM projects. It could be triggered by only one, or many of these triggers.

External resources • Ideally, use internal resources • Ensure continuity • Easier for acceptance • Depending on internal skills, external BPM should be present at start • Experience is very valuable for this type of project • Transfer knowledge • Other reasons for experts over duration of project: • Setting up Center of Business Process Excellence • Monitoring progress • Monitoring performance • Conflict resolution • Support for manager • Project evaluation

Who is selling IT Three main parties are involved in the selling BPM 1. Internal parties of the organization - Enthusiastic individuals - Process Owner - Business Excellence Centers - Senior Executives 2. Software vendors - Focused BPM vendors (eg. Staffware) ex) http://www.workflowpatterns.com/vendors/ - Similar type vendors - From CRM to BPM - Big companies - IBM, SAP, Oracle 3. System integrators or consultants - Dedicated BPM practices from integrators - Consultants can design, describe, support implementation

BPM critical success factors Reality of BPM implementation: - very complex - cut across departments - may cut across organizations, clients, vendors, partners Ten fundamental and critical success factors for BPM projects • Leadership • Project manager with BPM experiences • Linkage to organization strategy • Process architecture • Structured approach to implementation • People change management • People empowerment • Project initiation and completion phases • Sustainable performance • Realizing value

Organization strategy phase Each step must be considered but intensity will vary depending on the project More effort will be put as the project scenario is from “business-as-usual” to “pilot”, to “under the radar” and finally to “in driver’s seat”

Process architecture model From principles to the process domain Visual presentations of high-level processes More detailed models produced in later phases

Process architecture phase 1 4 5 6 7 2 3

Launch pad phase • Launch pad is the platform where projects are scoped, established, and launched • Provides a way for starting, steps for success

Understand phase • The Understand phase is required to obtain enough understanding of the business process of the project in order to permit the Innovate phase to start. • Project team understands the objectives of the business • Will validate current processes, define improvement priorities

Innovate phase The Innovate phase designs the processes efficiently and effectively to meet the stakeholder’s expectations.

People phase The People phase creates the roles and people measurement solutions. People’s activities need to be aligned with agreed process goals. Job goals, and descriptions will be redesigned or created. Opportunity to make jobs more interesting for employees.

Develop phase The Develop phase has the objective of preparing the new processes for implementation. New system must remain flexible to handle new business situations and processes.

Implement phase

Realize value phase The Realize Value phase assures that the implemented project reaches the original target value. After implementation, it takes time to obtain the actual value of the implemented changes. Operational costs can actually increase during the first 3-6 months of implementation due to adaptation.

Sustainable performance phase The Sustainable Performance phase involves transforming the project to a normal business environment. It examines the long term view of processes and future projects in function of what customers value.

Business strategies Differentiation – better, or at least different Cost leadership – cheaper Response – rapid response

Models for change Frameworks for change BPM BPR Speed of change Gradual Drastic Models for specific business goals Lean Six Sigma Theory of Constraints Reduce waste, Value Reliability Throughput

Operational management