Embrace Complexity Paper- BeInformed

7/29/2019 Embrace Complexity Paper- BeInformed

1/15

Embrace complexity,

Simplify your organization

White Paper


2/151Embrace complexity, Simplify your organization

Executive summary

When reality changes, the old best practices no longer suffice. The reality of

business processes has significantly shifted. To deal with business megatrends

such as mass customization and customer self-service, administrative processes

have become more knowledge-intensive. In addition to traditional businessprocess management techniques and technologies, new practices and

technologies are needed to enable what analyst firm Forrester calls dynamic case

management.

In this paper, we explain how the transition can be made from process-based

operations to a more case-based focus. We also explain how business processes

can be tested to establish their level of knowledge-intensiveness and, if relevant,

the extent to which this needs to be improved. Finally, we outline the principles

which constitute the foundation of the Be Informed business process platform.

Be Informed is an internationally operating, independent software vendor. TheBe Informed business process platform supports administrative processes, which

are becoming increasingly knowledge-intensive. Thanks to Be Informeds unique

approach to dynamic case management, the next wave after business process

management, organizations using Be Informed often report cost savings of tens of

percents. Further benefits include a much higher straight-through processing rate

leading to vastly improved productivity, and a reduction in time-to-change from

months to days.



Introduction

Reduce complexity is one of the most important mantras in the board room.

Complexity of processes, complexity of systems and the complexity of the

organization itself. Complexity is the enemy of control, and most organizations

feel that increased control is of key importance in order for their business tosurvive and thrive.

As logical as it may sound and even feel, this intuitive reflex may very well turn

out to be wrong. Wrong and, in the worst-case scenario, damaging to future

business performance potential.

Complexity is a natural phenomenon; it is simply the way the world is, with all its

diversity and change. But there is a difference between what makes the world

complex and what makes it complicated. Complicatedness is a human concept. It

encompasses all the systems, processes and exceptions organizations have

created.

Over the years, companies have built complicated systems and processes, but

this has rarely given them greater control. On the contrary: complicatedness

leads to less control, inefficient operations and a growing distance from the

customer.

Consider the following examples:

An insurance company that has a strong customer intimacy strategy wants

to offer personalized cover, based on age, sociodemographics, asset value

to be insured, and customer preference. This could easily result in billionsof combined forms of cover. Should the IT department inform the CEO that

the systems are unable to handle the complexity, and that the company

should settle for standard products and services?

Within a countrys immigration service, civil servants assess whether

applicants should be granted a visa, the right to work or live in that

country, or that countrys nationality. They have to deal with tens of

thousands of rules, ranging from country-specific regulations to

supranational legislation such as European Union policies and the specifics

of the many treaties with other countries. Furthermore, rules change

multiple times each year. Would it be acceptable for the agency to rejectchanges because its processes, systems and organizational activities cannot

handle the complexity?

A hospital wants to redesign its processes. Old-style optimization would

consist of large batches of similar appointments and procedures, resulting

in multiple visits for patients. Now, it wants to schedule all appointments

and procedures for a patient on a single day where possible. However,

some examinations require the patient to abstain from eating, while others

require them to have a full stomach. Again, the many pre and



postconditions for procedures could easily lead to billions of combinations.

How can full observance of the conditions be ensured?

Complexity cannot be reduced. In attempting to achieve this, processes,systems, people and organizations create bottlenecks which obstruct the processof dealing with the natural complexity in the world.

Instead, a competitive advantage in the private sector or sustainable government

in the public sector can be achieved through a different competence: embracing

complexity.

A McKinsey report outlined the business case: If complexity, in all its aspects, is

seen as a challenge to be managed and potentially exploited, not as a problem to

be eliminated, businesses can generate additional sources of profit and

competitive advantage. Companies reporting low complexity [which we refer to

as complicatedness] had the highest returns on capital employed and returns

on invested capital.1

1 Source: Cracking the Complexity Code, McKinseyQuarterly, May 2007



Embrace complexity

In order to embrace complexity, we need to shift from a control-driven approach

towards an approach of empowerment. This means enabling your customers, call

center agents, citizens and so forth, to go with the flow. In other words,

providing them with the means to do their job, instead of telling them what todo.

This may sound risky, but the opposite is true. It may have been risky in

traditional business management, but if reality shifts, so must best practices.

S-curves

Reality shifts like S-curves. A new trend starts slowly, takes off and becomes the

new paradigm and best practice. Then, at a given moment, something

unexpected happens2. The list of possible disruptions is endless: the introduction

of Sarbanes-Oxley regulations turned business operations around; the credit

crunch turned public opinion on business conduct around; globalization turned

corporate thinking around. A new way of working is needed, as the old ways no

longer suffice. Usually, new ways of working are not as proven, and their return

is also lower. In fact, after a new S-curve has been adopted, business

performance can drop even further before it goes up. Then the new S-curve

becomes the next best-practice, until, at a given moment, something

unexpected happens again (see figure 1).

Figure 1: S-curves

2 This moment is often referred to as a black swan. A black swan representssomething thought impossible (within the existing view of the world).



If trends develop like S-curves in general, then trends in the world of business

processes most likely follow the same pattern. Indeed, they have already in the

past. From the beginning of the industrial revolution to the days of Frederick

Taylors scientific management, manufacturing processes were optimized

through mass production. Most people would be familiar with the quote that the

T-Model Ford could be delivered in any color so long as it is black . Today, this

could not be further from the truth. Cars, and other manufactured products, can

often be ordered in millions of different configurations, and every product can be

a unique combination of characteristics. Today, mass customization is the norm

a new S-curve.

Administrative processes have roughly followed the same path. In the 1980s,

business process re-engineering brought the first levels of operational excellence

for administrative processes, making back offices lean and efficient. Much faster

than in manufacturing, and almost seamlessly, the next S-curve followed.

Mass customization and customer self-service

Administrative processes are now mass-customized as well. Insurers can offer

personalized cover. Marketing departments use microsegmentation to offer

discounts and special offers, both online and through other channels. There is

almost no vertical where mass customization has not become a key value

proposition.

The principle of mass customization is also very prominent in the public sector.

Bureaucracy, in its original meaning, was invented to treat everyone equally, by

means of the same process. Nowadays

fairness is defined differently. It means that

government agencies give every citizen the

same special attention, based on their

specific circumstances.

Mass customization is often combined with another principle: self-service.

Particularly in administrative organizations, this is the new norm. Internet

banking at financial institutions, online check-in for flights, car and hotel

reservations via airline companies, self-direction of the building-permit

process.... These are all examples of customer self-service. The advantages are

clear. When customers take over the front-office work, the companys costs are

reduced and high-quality data is ensured (it is in the customers best interest to

enter their data correctly). Moreover, it strengthens the companys value

proposition, as customers are requesting self-service capabilities.

As a result of mass customization and self-service, customers are effectively

directing the organizations processes. They choose which customer contact

channel is used in each process step and perform those tasks at a time which is

convenient for them. In companies that have mass process customization, there

is no longer a difference between the front and back office. Doing business is a

process of continuous interaction and collaboration.

In a new S-curve, the best practices

of the old world are useless



Traditional business applications pose challenges

Control-driven processes no longer work. When there are billions of

combinations, it is simply not possible to define and document every possibility

and exception. In fact, every transaction is now a unique instance. The only way

forward is to define goal-oriented processes; the goal is to successfully complete

the process, and the process consists of those rules and activities which

specifically contribute to the goal.

Trying to run a process like this with a traditional business application the

result of years of business process re-engineering is challenging, to say the

least. Being able to change the system only twice a year when there is a new

software release is simply unacceptable. Recently, Gartner said, 30% of

organizations like to make changes to processes on a daily basis.3

The best practice in the old S-curve was to optimize operations through

deliberate and careful analysis, and execute with maximum precision. In short,

stick to the plan. In a mass-customized world, the only thing you can do is

stick to reality and optimize operations by keeping all your options open. It is

one level up: from optimizing operations to optimizing the change ofoperations.

Table 1 contains a list of characteristics of mass production and mass

customization.

Mass production Mass customization

Every transaction is the same Control-driven Two changes per year (system

release) Advance choices, stick to the plan Process-intensive Reduce complexity

Every transaction is a unique instance Goal-driven Continuous change, business-driven Keep options open, stick to reality Knowledge-intensive Embrace complexity

Table 1: mass production and mass customization

3 Michele Cantara, Gartner Research VP, Gartner Symposium, Cannes, 2010



Simplify your organization

Great. Great. Embrace complexity, instead of trying to reduce it. We get it. But

how? What if you are stuck with the systems you have? And what if your

employees are already handling the maximum of complexity they can cope with?

What other choice is there than to try to reduce complexity and start

standardizing products, services and business processes?

The great leap forward comes from abandoning the central concept of the old S-

curve: the process-centric approach. This approach dictates that transactions

need to follow the process, and that the moment transactions do not fit with the

process, the process needs more hardcoded exceptions. In more formal terms,

this is called a prescriptive approach.

The case-based approach

If you turn it around, the complexity problem disappears: put the case at the

heart, not the process. A case can be defined as all the work that needs to bedone to achieve a certain result for a customer, for example, or with an object

such as a building. The context of the case solely indicates which activities are

required in order for the case to be completed. There is no predetermined

sequence or set of activities that needs to be completed; there are no

unnecessary steps. This is more formally referred to as a declarative approach.

Table 2 compares the process-based approach with the case-based approach.

Process-based approach Case-based approach

Linear, clear, discrete processes

Procedure-based environments(what needs to be done next)

Build the process Bottom-up, inductive User follows the process Syntax-based, IT instrument Prescriptive traditional business process

management suite, business rulesengine

Non-linear, fuzzy, case-based processes

Knowledge-based environments (why itneeds to be done, what it contributesto the goal)

Build the guardrails Top-down, deductive The process follows the user Semantic, business in control Declarative innovative business process platform,

using ontological metamodels

Table 2: process-based versus case-based



Once you focus on the case, the old logic of having to fully define a process

upfront disappears. The actual process which will be different as each

transaction is passing through the process in a (slightly) different way becomes

nothing more than a metamodel that states only what has to be done instead of

how and in which order. To use a metaphor, instead of defining a road, like a

traditional process does, the metamodel only defines the guard rails.

This new way of thinking, referred to as dynamic case management by analyst

firm Forrester, also requires a different analytical approach. Today, business

processes are often defined inductively. This means that after many specific

processes have been defined, more generic business rules appear. These new

insights can be applied when these predefined processes are revisited. The

advantage of this method is that it is easy to understand and to follow; the

disadvantage is that it has led to the process spaghetti that many organizations

suffer from today. A metamodel approach benefits more from a deductive

approach, putting the process metamodel together first. Individual transactions

then all use components of this metamodel to effectively create the single-instance process. This is a sequence of steps derived from the metamodel to

process a single transaction. Once the metamodel is approved, billions of

different combinations can be made, while the metamodel ensures every single

instance is valid. The advantage of the deductive approach is its agility; the

disadvantage is that its comprehension requires more conceptual thinking.

Putting the case in the middle greatly reduces the complicatedness of business

process landscapes. It simplifies the organization and allows organizations to

embrace the inevitable complexity presented by their environment.



Take the test

Administrative processes are becoming increasingly knowledge-intensive.

According to Harvard Business Review, this means we have to redefine what

constitutes a knowledge worker, both in the public sector and in commercial

enterprise: When executives focus on knowledge workers, they lose sight of thefact that even highly routinized jobs require improvisation and the use of

judgment in ambiguous situations, especially if the goal is to drive performance

to new levels. Many of these improvisations require interactions with one's fellow

humans. [] All employees are ultimately knowledge workers.4

To test how knowledge-intensive your current or required business processes are,

choose either the statement in the left or right column of the following table.

Not knowledge-intensive Knowledge-intensive

Mass production in administration,clear overview of possiblecombinations

Low ambiguity, clear rules to follow Based on your own stable standards Operational decisions do not need to

be communicated Little contextual information is

needed the transaction speaks foritself

No room to deviate from the rules inthe process

Transactions are discrete and notconnected Transactions have a strict order of

steps

Mass customization in administration,every transaction looks different

Requires human judgment, highambiguity

Non-trivial impact of regulatoryrequirements

Operational decisions requireexplanation to customers

Contextual information is unstructuredor not always available

Easy terms and goodwill-sensitive Transactions and business rules arenon-discrete and interconnected Transactions are processed in

consultation with the customer

Table 3: Knowledge-intensive processes

The more statements you have chosen in the right column of the table, the more

knowledge-intensive your business processes are or should be. And the more

knowledge-intensive your business processes, the more you need to embrace

complexity.

4 http://blogs.hbr.org/bigshift/2010/04/are-all-employees-knowledge-wo.html



How Be Informed helps you to embrace complexity

The Be Informed business process platform, based on the principles of dynamic

case management, helps organizations to achieve high levels of straight-through

processing, dramatically reduce operating costs and optimize customer

interaction. At the core of Be Informeds unique approach is ontology, as shownin figure 2.

Figure 2: A Be Informed ontology depicting a subsidy case

An ontologyis a formal representation of knowledge as a set of concepts within adomain and the relationships between those concepts. The relationships, in the

form of pre and postconditions, define the boundaries of a process. They say

what needs to be done in order for the transaction to be completed successfully,

but without specifying the exact method. For example:

If Activity A has a precondition for a certain result as input, then anotheractivity that produces that result needs to be completed first, irrespective

of which activity produces that specific result.

If Activity A needs to produce a result, this is called a postcondition.Typical postconditions include creation of documents, assessments or data

elements for potential next activities. Some activities are geared towards decision-making. This can be in the

form of a calculation or classification, for instance. These decisions

typically require multiple preconditions, and are communicated through a

single postcondition.



Off the shelf

Putting together the metamodel the ontology is the most important part of a

Be Informed business process platform implementation. If one of Be Informeds

standard solutions is used, much of the ontology comes as part of the off-the-

shelf product. When the ontology is started, the application comes to lifeinstantaneously. Once you change an activity or its pre or postconditions, the

changes take effect immediately (or within a specified time frame). The ontology

also represents the documentation of the application, providing the big picture

of the relationships between the various activities. Lastly, the ontology even

drives the interface generated immediately for the user.

The most visible element of the ontology for an end-user is Be Informeds goal-

oriented dynamic activity plan. Figure 3 depicts a drinking-and-driving process

for a typical police force. On the left, the dynamic activity plan shows the status

before a breath test is conducted, while on the right, the dynamic activity plan

shows the status of the case after the breath test has been completed.

Figure 3: drinking and driving



The dynamic activity plan is the guard rail of the Be Informed solution that isalways active. It depicts the ontology in three intuitive ways:

The current activities that you can perform if you wish to. There is noprescribed order for the current activities; users can choose which activity

they prefer to perform first, based on their own insights, their discussions

with the customer or their own preference.

The processed activities are those which have been completed already.However, should new information arise, these activities can be repeated

easily, without the necessity of restarting the process. Repeating activities

immediately updates the status in the dynamic activity plan, retriggering

other processed activities, current activities and future activities.

Future activities that cannot yet be processed. The preconditions of theseactivities state that the information available for them is insufficient, and

further information needs to be generated by other activities first.

Whether activities should be processed manually, based on human interpretation

of facts, or can be processed straight through, depends on design choices or the

level of ambiguity of the available information.

What makes Be Informed unique?

The dynamic activity plan makes the Be Informed business process platformgoal-

oriented. This means that the systems suggests only the activities which are

necessary for the completion of the transaction. All unnecessary activities are

omitted. At the same time, should the user find new information, the process

does not need to be restarted. When the new information is processed, the new

route to the goal is generated immediately.

In short, the following principles are unique to the Be Informed business process

platform:

Everything is a business rule. In other words, there are no exceptions tothe rules all conditions are rules. This approach allows many knowledge-

intensive, complex transactions to be handled by a single generic process.

Separate the know from the flow. The business rules (the know)are not stored in the business systems and the processes (the flow), but

in a repository, so they can be reused. Furthermore, if a business rule

changes, the system adapts accordingly.

Do not model the process. Be Informed models the activities and their preand postconditions so that each transaction can have its own unique flow.

The system provides guidelines on how to successfully complete

transactions.

This is the idea on which the Be Informed business process platform is based an

idea that has been adopted by many organizations already, both in the public

and private sector.



About Be Informed

Be Informed is an internationally operating, independent software vendor. The

Be Informed business process platform supports administrative processes, which

are becoming increasingly knowledge-intensive. Thanks to Be Informeds unique

approach to dynamic case management, the next wave after business processmanagement, organizations using Be Informed often report cost savings of tens of

percents. Further benefits include a much higher straight-through processing rate

leading to vastly improved productivity, and a reduction in time-to-change from

months to days.

Author: Frank Buytendijk

Contributing authors: Jan Willem Ebbinge, Linda Muselaars and Geert Rensen


15/15

[Type a quote from the

document or the summary of an

interesting point. You can

position the text box anywhere

in the document. Use the Text

B T l t b t h th

Be Informed

Wapenrustlaan 11-31

7321 DL Apeldoorn

The Netherlands

T +31 (0)55 368 14 20

E [email protected]

www.beinformed.com

Embrace Complexity Paper- BeInformed

Documents

Transcript of Embrace Complexity Paper- BeInformed