13-10-2023

Business Process Management – An Introduction

Francis Castelino

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Context: Where Business Process Management fits into

Management of an Organization
To manage an organization, we need to understand three
main aspects:
1) Organizational Design

2) Business Process Management

3) Decision Making Process Management

Organizational Design
Two levels of investigation:
• Microstructure
• how we can design the role of the individual within an organization.
• job definition
• level of specialization and
• mechanisms to coordinate people

• Macrostructure
• how we can design the grouping of individuals performing related
activities
• grouping criteria
• organizational structures
• management of the hierarchy, and
• mechanisms to coordinate organizational units.

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Business Process Management

• Business process management is a structured approach to look into how
people work inside an organization and which is the flow of their daily
activities
• Why it is important to adopt a process-orientation in an organization
• Which is the link between the business processes and the
organizational structure.
• What are the practices and principles of process management through
measurement of process performance up to basic insights on how to
design and improve a process

Decision Making Process Management

• How people make decisions in an organized context.
• How to manage the process of decision making distinguishing
between problem setting and problem solving
• Looking at difficult situations such as conflicts, risk or uncertainty.
• Discover one of the most used tool to modelling decisions with
multiple actors involved, namely game theory.
• How to take the basic decisions to design properly an organization, to
effectively manage processes and to rapidly take decisions, according
to the environment in which the company operates.

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The Context
• Businesses are faced with customers who demand more:
• Quality of service
• Responsiveness
• Value for money
• Personalization
• To deliver on this, an enterprise needs to function in an
integrated manner across functional boundaries
• It is precisely to address the need to move from piece-meal
solutions to integrated systems that ERP was introduced

Yet………
• There are many cases of companies which have begun
ERP implementation, but dropped it midway

• There are many incidences of companies where the

expected business results have not materialized

• Deloitte Survey: After ERP systems went live, one in four

firms suffered some performance drop

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The Issues
• An ERP solution is a technology enabled business solution
• The organization’s business processes may not be ERP
ready
• Clients with fundamental business problems expect ERP to
function as an expensive (but effective) magic wand
• Systems cannot function in isolation of people, process and
structure issues
• What is optimal for a part may be sub-optimal for the whole

The Full Picture….

System/Technology

People

Structure Process

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The Model Transformation Process

Input Transformation Output

• Transformed • Goods
Resources • Services
• Transforming
Resources

A business process is initiated by an EVENT (Trigger), consumes

RESOURCES, performs ACTIVITIES and produces Goods and Services

The Various Transformation Routes

Transformed Resources
•Material
•Information
•Customer

Location Change
Possession Change
Storage Change
Reconfiguration
Physical Conversion

Transforming Resources
• Facilities
• Human Resources

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Business Processes

“It is possible to group processes in an organization into a small

number of business transformations”

There are three types of Business Processes-

• End-to-End Process
• Funnel Process
• Composite Process

A process is an interrelated series of activities that convert business input

into business output with a value that a customer is willing to pay for

Requirements, constraints

Order Order fulfilment

Resources, Tools, IT systems

A process has a customer (internal or external) and it crosses organizational borders

Order
Order fulfilment

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Manufacturing Organization's Business Process

Master List (BPML)
Procure to Transactions Inventory Governance –
Pay to Final (Receipt to Regulatory -
Accounts Consumption) Compliance
Order to Hire to Retire Asset acquisition Sourcing to
Cash – Capitalization - Utilization of Funds
Disposal
Plan to Production to Product Lifecycle Establishment /
Produce Warranty Management Business Support

Business Process - Samples

https://www.salesforce.com/in/resources/articles/what-to-know-about-order-to-cash-process

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Business Process - Samples

https://api.sap.com/valueflow/HR1H1-SVFSolutionProcess

Sales Order Process (Order-to-Cash)

Sales Order Check

Entry Availability

Pick
Materials

Receipt of Pack
Customer Payment Materials

Invoice
Customer Post Goods
Issue

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Procurement Process (Procure-to-Pay)

Purchase
Purchase
Requisition
Order

Notify
3-Way Vendor
Match
Payment
to Vendor
Vendor
Shipment
Invoice
Receipt
Goods
Receipt

Sample Process Breakdown

Business Process

Concise
Process Element
Manageable
Activities
Definable
Tasks

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Properties of the Process Elements

• Value Chain (Value adds vs. Non-value adds)

• Variability (Controllable vs. Uncontrollable causes)
• Measurement
• Logical Network
• Ownership
• Automation (Simple & Integrated)

Process Element
A series of activities that transforms an
INPUT OUTPUT

(product/service)

Should be judged by its contribution to achieving

business strategy.

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Types of Process Performance Measures

• End of process- originate primarily from customer
requirements
• Functional boundaries- at point of interface between
various functions.
• Major sub product – identifying problems at sub
process level that constitute the final process
• Variances – unplanned “break points”.

What To Measure?
• Cycle time: Total elapsed time to complete a specific
process.
• Costs: Calculated by aggregating all costs within a process
• Quantity: Counts the number of “units” processed within a
certain period of time
• Quality: Measured by degree of meeting customer’s desired
product/service attributes (e.g. Six Sigma standards)
• Customer user standards: Includes service level agreements
and standard operating procedures

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Ways To Develop Process Performance Mapping

• Process Maps
• Activity Charts
• Task Analysis

Process Maps
A Process map helps to identify the critical activities within a
process
• Map from customer to the job that which is most critical to the
customer and then to other supporting jobs.
• Indicate boundary crossings (between jobs, departments,
organisation, etc.)
• Map the task in process from left to right, following the
continuum of time.
• Tasks appearing under each other indicate that they can be
undertaken simultaneously

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Process Maps
Steps and information sources used
• Map from customer down - customer, stakeholders
• Identify process starts and stops - process owners
• Identify activities (tasks) and boundary crossings- process owners
• Identify hand-offs and bottlenecks - stakeholders
• Estimate cost of each activity - finance, stakeholders
• Standardise performance measures - management,
process owners

Process Map – Drawing Convention

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Top-level Process Model For Procurement Business

Detail Process Model For Procurement Business

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Activity Charts
• Show relationship between activity in process and related
systems/sub systems
• Provide more explicit information - helps to develop better
performance measures
• Can be used in conjunction with process maps to identify
and ultimately reduce number of boundary crossings

Sample Activity Charts

Greet customer

Ask for first and last name

Ask for order

Activity:
Taking customer order Ask for item characteristics
Relationship: Ask for credit/ATM card number
Customer Verify card number

State order number

Inquire about additional items

Offer sales items

Indicate delivery dates

Thank customer for order

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Sample Activity Charts

Log in names

Activity: Check availability

Taking customer order

Relationship: Log- in order
Order Entry System

Verify order

Number of screen accessed

Sample Activity Charts

Input card number

Activity:
Taking customer order Verify card number
Relationship:
Credit System

Verify credit availability

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Task Analysis

• Provide a comprehensive listing of task-level details

• Graphic illustration of work flow across a process
• It does not add any additional information about the process
itself.

Sample Task Analysis

Some of the activities Task symbols
Greet customer
Ask for order
Ask for credit/ATM card #
Verify card number
Pick and pack order
Move to shipping
Ship
Inquire/state Perform Input

Transport Inspect

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Benefits of Process Orientation

• Cost Savings
• Lead Time Reduction
• Customer Satisfaction
• Increase of Flexibility

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