BUSINESS PROCESSES MODELLING IN SMEs USING PETRI NETS

1. BUSINESS PROCESSES MODELLING IN SMEs USING PETRI NETS Vesna Bosilj-Vuksic Department for Business Computing, University of Zagreb, Faculty of Economics Simon J.E. Taylor Centre for Applied Simulation Modelling, Department of Information Systems and Computing Brunel University, Uxbridge, Middx, UB8 3PH, UK

2. Presentation Overview • Small and medium-sized enterprises (SMEs) in the global marketplace • Business process reengineering (BPR) • The critical role of information technology (IT) in BPR • The Internet and online business models • BPR and Petri nets • DES-nets • An example of simple retail processes using DES-nets • Conclusions

3. Small and medium-sized enterprises (SMEs) in the global marketplace • Small and medium enterprises (SMEs) are extremely important to many countries. • According to the European SME observatory, 99,8% of European organisations in 1999 were SMEs, representing almost 66% of total employment [The European Observatory for SME, 1999]. • E-commerce is a unique opportunity for SME’s to extend their capabilities and to facilitate business growth. • Though SMEs have identified the benefits of IT and e-business, they are lagging behind in adopting new business models because of a number of barriers: unavailable investment capital, lack of resources, lack of knowledge and long-term e-commerce strategy.

4. Business process reengineering (BPR) • In order to survive in highly competitive business environments, companies have to continuously change their business processes. • BPR means analysing and altering the business processes of the organization as a whole. • Many leading organisations have conducted BPR,but the rate of success of re-engineering projects is less than 50% [Hammer and Champy, 1993]. • Some of the frequently mentioned problems related to BPR include the inability to accurately predict the outcome of a radical change and the inability to recognise the dynamic nature of the processes.

5. The critical role of information technology (IT) in BPR • The Internet plays a significant role in BPR projects. • The efficiency of BPR depends upon the innovative stage of the information system and its use of modern IT. • IT has the strongest impact on standardization or elimination of process variations. Because of that informatization cannot start before the work process improvement has been successfully implemented. • IT contributes heavily as facilitator to the process of reengineering. • IT contributes in the reengineering process as enabler to master the new process in the most effective way. • The Internet technology is also an easily available and low-cost strategy for BPR implementation.

6. The Internet and online business models • The Internet is altering the ways in which businesses operate and interact with customers, suppliers and partners. • The Internet enables companies of all sizes to develop new online business models. • E-business includes fast changes of business environment and demands quick and flexible adoption of businesses. • E-business is not only enabling the redesign of internal organisational processes, but is extended into inter-organisational processes. • An enhancement geared to include inter-organisational processes is called Business Network Redesign (BNR). • BNR identifies the inter-organisational processes to redesign and extends the strengths of BPR to the networking among business partners. The Internet enables companies of all sizes to develop new online business models

7. BPR and Petri nets • Petri nets are a method which enables graphical modelling of system behaviour simultaneously enabling introduction of mathematical formal rules for system behaviour definition [Petri, 1962; Törn, 1985; Oberweis and Sönger, 1992]. • A whole variety of Petri nets extensions have been developed, each being specific and each having certain extensions. • Simulation modeling has a great potential for assessment of the possible benefits as it enables quantitative estimations of influence of the redesigned process on system performances. • Petri nets could be used in BPR projects because of the following characteristics: simplicity, representation power comprising concurrency, synchronisation and resource sharing, strong ability of their mathematical analysis and application of software tools.

8. DES-nets • DES-nets are built around coloured Petri nets [Ceric, 1995] because they are by far the most developed type of high-level Petri nets. • DES-nets incorporate some simulation graphs extensions such as arcs with weight, timed transitions and inhibitor arcs. • DES-nets incorporate also additional extensions, such as three types of decision rules:priority rules,probability rules and conditional rules. • DES-nets use the following elements of coloured Petri nets: token colours, token colours sets, place with inscription (coloured place), arc with inscription (coloured arc) and transition with a guard. • Discrete Event Simulation nets or DES-nets are used in this paper in order to demonstrate the suitability of Petri Nets for business process modelling.

9. An example of simple retail processes using DES-nets • In this research an example of modelling simple retail processes using DES-nets is provided. • The increasingly complex conditions of retail business create the need for radical advances in the retail process of SMEs. • Starting with the objectives of modernising the retail business process in SMEs it is possible to re-define scenarios of existing retail processes. • The re-engineered retail process can be divided into three phases, which can be defined as the sales scenario, the purchasing scenario, and the stocking scenario.

10. An example of simple retail processes using DES-nets Figure 1: DES-net of sales and purshasing scenario

11. An example of simple retail processes using DES-nets Figure 2: DES-net of thestocking scenario

12. Conclusions The Advantages of Computer Supported Retail BusinessProcess Model • Data and information about sales are collected at Electronic Point of Sale (EPOS). • The processed data is the basis for an analysis of sales, accounting and financial operations. • The information system supports the logistics related operations of receiving and stocking merchandise in the store and inventory control. • EPOS includes a module for automatic electronic payment (Electronic Fund Transfer). • The implementation of proposed model could be the first steptoward e-commerce implementation in SMEs.

13. Conclusions Suitability of DES-nets for Business Process Modelling • Presented characteristics of Petri nets accomplish the typical objectives of BPR to increase service level, reduce total process cycle time and waiting time reduce activity, resources and inventory costs, and increase throughput. • Petri nets are "cost-effective" methods of exploring "what-if" scenarios quickly and finding a problem solution or providing better problem understanding. • They are supported by a number of software tools that enable graphical representation of the system by the executable models. • There is also a possibility for automatic translation of Petri nets into IDEF diagrams which are widely used in business process modelling, especially in information system modelling.

14. Conclusions Limitations of Petri Nets • Lack of standardization (a large and growing number of Petri nets) • Rather complicated to understand for the members of BPR projects not specialized in computing and simulation • Not suitable for modelling ofprocesses’ data • Could be more appropriate to use IDEF diagrams during the preliminary phases of business process modeling projects due to their simplicity and understandability • In later phases, when “TO BE” models are developed, IDEF diagrams could be transformed into Petri nets which adds formal semantic to the models.

15. Conclusions BPR Framework The adoption of presented methodology by SMEs could help to avoid a number of major BPR mistakes: • lack of understanding of the opportunities available to SMEs • lack of employees' skills and knowledge of BPR methods and tools • high investment costs related to business process identification, analysis and modelling • difficulty in capturing existing processes in a structured way • inability to accurately predict the outcome of a radical change and to recognise the dynamic nature of the processes

16. Conclusions Future work • A "prototype" of the "standard retail business process model"was developed. • The benefits of the developed model should be explored. • Future research will be oriented toward general retail business process model for guiding SMEs performance improvement.