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INTRODUCTION TO PROCESS MANAGEMENT AND OPTIMIZATION

ifb SE, Cologne, February 2022

Present yourself

• First and last name

• Team
• Academic background
• Knowledge in Process Management

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 AGENDA
» 1. Objective / Expectation
2. Basics of process management
3. Basics of process optimization
4. Procedure process optimization
5. Business Case

01.04.2022 | Introduction to Prozessmanagement and optimization | 5

 AGENDA
1. Objective / Expectation
2. Basics of process management
» • Introduction process theory
• Process recording and documentation
3. Basics of process optimization
4. Procedure process optimization
5. business case

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Introduction to process theory
DEFINITION: PROCESS

Definition:
"Purposeful production of an output by a sequence of logically related activities performed within a period of time according to
specified rules." *

* Vahs, D. (2007), S.222

• A process is a defined sequence of activities that necessarily build on each other and transform inputs into outputs.

• A process consists of a series of activities, ideally all of which are contributing towards producing the output.

• The inputs to a process are data, raw materials, products, etc. that are required for the activity.

• The output of an activity is information, services, products, etc. that are further processed either in the same process and/or in
another process.

• Processes are routinized patterns of interaction.

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Introduction to process theory
VALUE CHAIN

Cycle

Management
Supplier Key Performance Indicators (KPI) Customer
Rules

Input Output
Materials Product
Data Process Service
Money Information
Money

Resources
Employees Machines
Knowledge/Information Infrastructure
Technology

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Introduction to process theory
IN PRINCIPLE, PROCESS MANAGEMENT OFFERS SIGNIFICANT ADDED VALUE

...Efficiency increase and cost reduction ...increased process transparency and thus improved control of processes in
through... the workflow.
Process management leads to…

...Yield increase through… …process orientation focused on customer needs.

…Increased productivity through… …targeted process controlling and process management.

…increasing the degree of automation and avoiding manual activities as well

…Reduction of operational risks through…
as predetermined breaking points.

…through minimized process costs, reduced resource utilization and lower

…Cost reduction…
error rates.

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Introduction to process theory
PROCESS CATEGORIES

Management processes
...are concerned with the planning, management and control of the
Management processes company's activities.

Core processes Core processes

...pursue the goal of service production with a final result that represents
a contribution to the company's success. In doing so, they have interfaces
A1 A2 A.. An
with external and internal suppliers.

Process chain

Support processes
...support the business processes and the management processes in their
Support processes performance creation.

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Introduction to process theory
PROCESS MAP

Management processes

Accounting Controlling Compliance Corporate monitoring Group controlling Product development

Core processes

Risk Management Treasury Cash Management

Sales Product Management

Customer Service

Support processes

Staff IT Communication Project Management Procurement

Information Management Emergency Management Notfallmanagement Internal Affairs Legal

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 AGENDA
1. Objective / Expectation
2. Basics of process management
• Introduction process theory
» • Process recording and documentation
3. Basics of process optimization
4. Procedure process optimization
5. business case

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Process recording and documentation
DESCRIPTION OF THE PROCESS STRUCTURE

The process cluster is a specific set of main processes that pursue a specific goal and/or view across the organization. It categorizes
Process cluster
the processes that make up the company's value chain.

The main process is the collection of all connected, structured sub-processes (and their activities) that produce a specific service or
Main processes product for a specific customer/buyer. They unite the process chain of the processually independent processes at the highest
possible hierarchy level.

Sub-Process The sub-process represents two or more activities that are a significant part of the main process. Sub-processes can be dependent
on other sub-processes and must therefore be coordinated with each other.

An activity is the level where the process description is often based. It is the description of related work steps or the grouping of
Activity
similar different areas or persons necessary to complete the task and/or work result.

The process step represents the lowest level of an organization and contains a single work description to perform the overarching
Process step activity. Tasks are described with a single instruction (e.g., enter data into screen on computer) and are supported by detailed
descriptions, such as work instructions.

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Process recording and documentation
PROCESS - HIERARCHY

Processes are represented in different levels of detail at different levels in an organization.

„Process cluster“ „Main Processes“ „Sub-Processes“ „Activities“

Core processes

Risk management Treasury Cash Management

Product management

Settlement
Credit
Sales Sub process 2 Sub process 1
Trade Activity 2 Activity 1 Activity n
Sub process n

Kundenbetreuung

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Process recording and documentation
ROLE OF THE PROCESS OWNER

• The process owner is responsible for

- the process and its design,
- the leadership of the employees responsible for the process
- the planning and successful execution of the process
- the cooperation with the neighboring Process-Owners (interfaces),
- the continuous process improvement and
- the complete and proper documentation of the process,
• Ensures consistency in the process,
• Maintains and adjusts the process for which he/she is responsible,
• Ensures cost effectiveness and
• Is not necessarily the performing employee.

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 AGENDA
1. Objective / Expectation
2. Basics of process management
» 3. Basics of process optimization
4. Procedure process optimization
5. Business Case

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Basics of process optimization
VARIANTS OF PROCESS OPTIMIZATION

ONE-TIME PROCESS OPTIMIZATION CONTINUOUS PROCESS OPTIMIZATION

• There is a TRIGGER (problems or cost pressure), which • PDCA: Iterative four-phase process for analysis and
usually comes from the company management optimization.

• Based on the as-is analysis and the future direction, • DMAIC/Six Sigma: Six Sigma is a systematic approach to
optimization potentials can be found. process improvement using statistical methods.

• Through the one-time process optimization, quick wins can • Kaizen: Kaizen is a Japanese management concept that
be made or redundant process steps can be eliminated. focuses on the step-by-step improvement and perfection of
processes.

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Quiz

https://www.sli.do/

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 AGENDA
1. Objective / Expectation
2. Basics of process management
3. Basics of process optimization
» 4. Procedure process optimization
5. business case

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Procedure process optimization
OVERVIEW

The task, that Process optimization is a complex task that requires a structured project approach.

In many projects for sustainable process optimization carried out in practice, a procedure in four phases
…will be divided in 4 phases has proven successful, which are individually tailored to the respective framework conditions of the
company and of the concrete process.

Project Management & Change Management

Implementation,
Documentation and as-is
Initiation/Vision Design of target model stabilization and
analysis (current state)
continuous improvement

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 AGENDA
1. Objective / Expectation
2. Basics of process management
3. Basics of process optimization
4. Procedure process optimization
» • 1. Phase: Initiation/Vision
• 2. Phase: Documentation and as-is analysis
• 3. Phase: Design of target model
• 4. Phase: Implementation, stabilization and continuous improvement
5. Business Case

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Phase 1: Initiation/Vision
DEFINITION OF SCOPE, STAKEHOLDER, TARGETS AND PROJECT PLAN

Project Management & Change Management

Implementation, stabilization and

Initiation/Vision Documentation and as-is analysis Design of target model
continuous improvement

Activities during the initiation/vision are:

• Vision identification
• Deriving the goals from the vision
• Definition of the project scope
• Definition of the project goals
• Identification of affected persons/departments incl. definition of concrete resources
• Project plan setup
• Execution of a kick-off meeting
• Clear clarification of customer expectations/results incl. stakeholder management

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Phase 1: Initiation/Vision
ORGANIZATIONAL CHANGE MANAGEMENT

Reactions, resistance and reasons

Reactions • „Factual“ Argumentation

1. Less resistance
• Conspiracy
Every project generates reservations/resistance to • Hostility
• Negative attitude
Resistance • Controversy
varying degrees among the employees concerned • Lack of motivation
• Rumors
• Delays

• Routine
• Inflexibility
• Egoism
Reasons for resistance • Ignorance
• Power games
• Fear of rational behavior
• ...

Most important question: How do you make the step from "I am informed" to "I participate"?

Participiation
2. Increase readiness for change (includes): Acceptance e.g. business
Understanding management,
• Understanding of the need and potential benefits Information e.g. affected project
e.g. all affected employees management
• General acceptance for the change e.g. all employees
employees
„This is ,,I‘ll deal with it“
,,We are „We understand
necessary“
informed“ why“

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 AGENDA
1. Objective / Expectation
2. Basics of process management
3. Basics of process optimization
4. Procedure process optimization
• 1. Phase: Initiation/Vision
» • 2. Phase: Documentation and as-is analysis
• 3. Phase: Design of target model
• 4. Phase: Implementation, stabilization and continuous improvement
5. Business Case

01.04.2022 | Introduction to Prozessmanagement and optimization | 28

Phase 2: Phase: Documentation and as-is analysis
RECORDING AND DOCUMENTATION OF PROCESSES AND INTERFACES

Project Management & Change Management

Implementation, stabilization and

Initiation/Vision Documentation and as-is analysis Design of target model
continuous improvement

Aktivitäten bei der Aufnahme und Analyse sind:

• Identification/recording of the current processes
• Analysis and mapping of the current processes
• Review of applications and information systems
• Assessment of the degree of automation and system integration
• Identification of 'quick wins', if necessary also identification and evaluation of improvement potentials
• Examination of dependencies to other projects/activities
• Identification of process dependencies, interfaces and restrictions
• Assessment of complementary aspects such as environment, culture, etc.
• Cost/benefit analysis

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Phase 2: Phase: Documentation and as-is analysis
PROCEDURE FOR THE PROCESS RECORDING

TOP-DOWN APPROACH BOTTOM-UP APPROACH

• First identification of the core processes and their sub-processes, then
definition of the support processes and management processes.
• Information can usually be taken from the business strategy or the
business plan.
• Identification of business and sub-processes can take place in
workshops together with management
• Starting from activities at the lowest process level
• Bundling of these activities into sub-processes and business processes
• Creation of the overall process map to identify the interrelationships
and interfaces

The approach recommended by ifb is top-down:

• Derivation of business processes from the overall view of the company or the focused area
• Lower risk of getting lost in the details

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Phase 2: Phase: Documentation and as-is analysis
EXAMPLES OF PROCESS RECORDING

DOCUMENTS‘ ANALYSIS OBSERVATION METHOD

• Provision of existing documents such as work instructions by the • Recording by own perception directly at the time of the event with
customer subsequent interpretation.
• Analysis of the documents based on necessary criteria (process • Also called desk method, since the analysis usually takes place
description, responsibilities, etc.) directly at the employee's desk

INTERVIEW METHOD WORKSHOPS

• Personal interviewing of employees • Group interviews
• Standardized interview vs. non-standardized interview • Documentation of interview results on flipchart, picture cards or
• Documentation of interview results on flipchart, picture cards or whiteboard
whiteboard

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Phase 2: Phase: Documentation and as-is analysis
VISUAL EXAMPLES
Cards

Whiteboard

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Phase 2: Phase: Documentation and as-is analysis
VISUAL EXAMPLES OF THE PROCESS MODELING TOOLS

BIC Cloud MS Visio

Signavio

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Phase 2: Phase: Documentation and as-is analysis
PROBLEM AREAS IN THE ACTUAL ANALYSIS AND PROCESS MODELING

Confusion between current and target processes

The purpose and goal of the modeling was not defined

High level of detail in the model

Not everyone has the same understanding of the issue

The process representation becomes an end in itself, i.e. processes are not 'lived' afterwards

Instead of process flow, information flow is modeled

Documentation of inconsistent/incongruent processes (due to insufficient review/quality assurance)

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Exercise
CAR SALES PROCESS

Put the process steps in the right order and assign them to the swimlanes
Customer Make a
payment

Sales Manager sends

offer to the customer

Sales Manager

Send the Prepare the

Place the order
invoice invoice Process End

Finance Department

Purchase
successful
Delivery Does the offer meet
expectations?
Reject the offer Deliver the car
Yes
No

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 AGENDA
1. Objective / Expectation
2. Basics of process management
3. Basics of process optimization
4. Procedure process optimization
• 1. Phase: Initiation/Vision
• 2. Phase: Documentation and as-is analysis
» • 3. Phase: Design of target model
• 4. Phase: Implementation, stabilization and continuous improvement
5. Business Case

01.04.2022 | Introduction to Prozessmanagement and optimization | 38

Phase 3: Design of target model
DESIGN AND DOCUMENTATION OF THE PROCESSES IN THE TARGET IMAGE

Project Management & Change Management

Implementation, stabilization and

Initiation/Vision Documentation and as-is analysis Design of target model
continuous improvement

Activities during the design phase are:

• Development of an implementation plan
• Definition of the TARGET processes, taking into account:
• Process dependencies, interfaces, restrictions and redundancies of processes.
• System support
• Organizational accountability and creation of a SIPOC diagram
• Prioritization of improvement opportunities (e.g. centralization and standardization of processes) and quick wins
• Definition of training measures
• Ensuring knowledge (documentation/filing) and/or communication management
• Coordination with other projects and activities

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Phase 3: Design of target model
SIGNS OF IMPROVEMENT POTENTIAL AND NECESSARY MEASURES
SIGNS
• The effort for the process handling is disproportionately high
• The business process is divided into many small processing steps
• There is no differentiation of business transactions into normal and
special cases
• The result specification at the beginning of the process remains diffuse
• The transmission of information takes too long
• Frequent queries are necessary
• Different sources of information are used
• There are non-automated transfers of information from one
information medium to another (media discontinuities)
• Activities are carried out without any recognizable added value
• Tasks, competencies and responsibilities diverge
01.04.2022 | Introduction to Prozessmanagement and optimization |
MEASURES
• From the target process, detailed measures are to be derived in the
areas of 'processes', 'organization/employees' and 'systems'.
• Measures can be differentiated:
• Measures that can be implemented in the short term (quick wins).
In this case, the benefit is quickly recognizable.
• Measures that have to be implemented in the long term (project
character). The benefit is visible in stages.
• Practice shows that approx. 60% of the measures are quick wins and
can therefore be implemented in the short term.
• Furthermore, approx. 70% of all optimization opportunities relate to
the areas 'Processes' and 'Organization/Employees'.
40
Phase 3: Design of target model
CREATION OF THE TARGET MODEL

• It must be possible to integrate the identified target process into the process world of the organization:
• dependencies to other processes have to be considered
• Required resources must be available
• Required know-how must be available
• System requirements and interfaces must be taken into account
• Roles and responsibilities incl. competencies have to be defined during the redesign process
• Development of among others:
• new KPIs
• Controls/ plausibility checks/ reviews (e.g. quality of data/ products)
• Materiality limits
• All persons involved in the process must be included in the modeling and development of the target concept.

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 AGENDA
1. Objective / Expectation
2. Basics of process management
3. Basics of process optimization
4. Procedure process optimization
• 1. Phase: Initiation/Vision
• 2. Phase: Documentation and as-is analysis
• 3. Phase: Design of target model
» • 4. Phase: Implementation, stabilization and continuous improvement
5. Business Case

01.04.2022 | Introduction to Prozessmanagement and optimization | 43

4. Phase: Implementation, stabilization and continuous improvement
ROLLOUT OF TARGET PROCESSES AND CONTINUOUS IMPROVEMENT

Project Management & Change Management

Implementation, stabilization and

Initiation/Vision Documentation and as-is analysis Design of target model
continuous improvement

Activities during implementation, stabilization and continuous improvement are:

• Implementation of the new process and naming a process owner.
• Creation of an activity sequence plan including resource planning for implementation, stabilization and
improvement activities
• Implementation and testing of the systems
• Establishment of the process control tool
• Summary of lessons learned

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 AGENDA
1. Objective / Expectation
2. Basics of process management
3. Basics of process optimization
4. Procedure process optimization
» 5. Business Case

01.04.2022 | Introduction to Prozessmanagement and optimization | 47

 BUSINESS CASE

INITIAL SITUATION REQUEST

Landesbank aims to complete the annual report on the 20th working
day instead of the 25th working day after the balance sheet date:
• The quality of the figures and data should be increased.
• Bank employees are available if required
• Documentation of the actual processes is not available
The bank would like to be shown what a possible project procedure looks
like. In addition, they would like to know how the recording of the actual
processes is carried out and in which phases of the project employees
should be available to the external project team. Furthermore, the bank
expects a presentation about documentation possibilities of the processes
and the list of advantages the individual possibilities bring along.

You have 25 minutes to solve the problem.

Presentation length per group max. 2 - 3 minutes.

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Matthias Jacoby
Director
Matthias.Jacoby@ifb-group.com
T: +41 79 832 16 71

Nutsa Gozalishvili
Managing Consultant
Nutsa.Gozalishvili@ifb-group.com
T: +49 162 211 28 67

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