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BusinessWhitePaper

BPM: T Nxt Stag fCntins Pcss Impvmnt

Bruce WilliamsSenior Vice President & General ManagerBPM Solutions, Software AG

February 2007

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BUSINESS WHITE PAPER | BPM

CoNTENTSABSTRACT 3

BUSINESS SUCCESS IS PRoCESS-CENTRIC 4

IMPRoVING PRoCESSES 5

IMPRoVEMENT IS oNLY A PART oF

MANAGING PRoCESSES 5

THE LIMITATIoNS oF CPI

FRAMEWoRKS LIKE SIX SIGMA 5

THE LIFE CYCLE oF BUSINESS PRoCESSES 6

THE EMERGING WoRLD oF

PRoCESS-MANAGED BUSINESS 7

BPM: THE NEXT STAGE FoR CPI 7

BPM THE PoWER oF PRoCESS

To THE PEoPLE 9

ABoUT THE AUTHoR 10

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3

Abstract

Cntinuus Prcess Imprvement (CPI) prgrams like Six Sigma and Lean

have created ver 100 billin dllars in savings and unleashed break-

thrugh pprtunities in businesses and rganizatins all sizes and

types. But r many reasns, these methdlgies have r the mst

part been implemented independent enterprise inrmatin systems,

severely limiting the reach and eectiveness CPI. But nw, Business

Prcess Management (BPM) slutins are uniting the capabilities pr-

cess management platrms and CPI methds, enabling rganizatins t

dramatically extend the best practices CPI acrss their enterprise and

thrughut their value chains.

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BUSINESS SUCCESS IS PRoCESS-CENTRIC

Lng bere the current wave cmpetitive pres-

sures, perrmance challenges, and slutins er-

ings hit the market, schlars and business leadersrecgnized the primary rces that aect rganiza-

tinal success. During the past ty years in particular,

researchers, practitiners, and inrmatin systems

prviders have cllectively investigated, develped,

and subsequently implemented specic methds

and tls t cntrl these rces. The evlutin ur

cmbined understanding has been marked by nu-

merus breakthrughs in appraches and techniques,

and cnsequentially sharp rises in business prduc-

tivity and value.

The cmmn undatin r understanding business1

perrmance is the prcess perspective, based n the

intuitive ntin that what yu get is the result hw

yu wrk. In ther wrds, the viability yur prd-

ucts and services, and, ultimately, the perrmance

yur verall business, is the direct result and ut-

cme the many prcesses at wrk within and

arund yur enterprise. Imprve yur prcesses, and

yu imprve yur prducts, services, and the perr-

mance yur verall business.

Prcess excellence is nw widely recgnized as theunderlying basis r all signicant measures cm-

1 Throughout this paper, business is used as a general termo reerence or any proessional organization, includingcompanies and corporations, non-prot entities,government and educational institutions, utilities, andothers.

2 Business Process Excellence Insights and Solutions orClever Companies, PriceWaterhouseCoopers, Jan 2007.

petitive perrmance.

Custmer Satisactin is the result ptimizing

and aligning prcesses t ulll the custmers

needs, wants, and desires.

Csts result rm the eectiveness peratins

and supplier prcesses.

Cycle and Fulllment Times are the result the

manuacturing and lgistics prcesses.

Quality is the result o design, development, and ex-

ecution processes.

Dierentiatin is the result marketing and in-

nvatin prcesses.

Prductivity results rm the success each indi-vidual as they perrm in their wn wrk prcess-

es.

operating prcesses drive every area business

rm buying and selling, t delivering prd-

ucts and services, t interacting with custmers,

suppliers and vendrs. Imprved business pr-

cesses generate mre prts and give yur busi-ness a cmpetitive advantage. Inecient perat-

ing prcesses carve away at yur bttm-line.

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IMPRoVING PRoCESSES

Businesses and rganizatins all types nw

regularly embrace sme type rmal ap-

prach t imprving their business prcesses.While every imprvement prgram is tuned t

the industry and envirnment at hand, each

apprach is based n a cmmn-sense strate-

gy: rst select an area r imprvement, then

assess the current state and cnditins next de-

termine the change t a new state, and nally,

implement the imprvement.

When an rganizatin implements a prgram

t repeatedly imprve prcesses, its called

Cntinuus Prcess Imprvement, r CPI. CPI

prgrams like Lean, Six Sigma, and TQM are a-

mus r setting in mtin a cmbinatin

philsphy, management ramewrk, and sup-

prting tls t evaluate and imprve pera-

tinal prcesses in an nging manner. They

prgrammatically institutinalize the pursuit

imprvements in the verall perrmance

the rganizatin r enterprise. When ap-

prached this way, and implemented and man-

aged prperly, CPI initiatives can be wildly suc-

cessul and lead t dramatic increases in the

quality prducts and services, cmpetitive-

ness, and the value delivered t custmers.

Because prcess excellence is a key driver

business perrmance, rganizatins with suc-

cessul prcess imprvement initiatives are

zealus in their supprt r and cmmitment t

CPI. They apply their CPI methdlgies acrss

the enterprise: tp-t-bttm, wall-t-wall,

and even beynd their wn walls with suppli-

ers and custmers. They live and breathe the

language and the tls. They directly measurethe eectiveness their activities and g n

the recrd with their results. Fr example, lead-

ing crpratins practicing Six Sigma, reprt

returns n investment ve times r greater,

with cllective results nw exceeding $100 bil-

lin in ttal value.

Whats at stake? Nthing less than the abil-

ity t ptimize perrmance. Sustainable

prcess management demands a custmer-

centric leadership perspective, cntinuus

measurements what matters t custm-

ers, nging mnitring prcess perr-

mance and executive accuntability r im-

prving key prcesses. Thse wh keep

mving typically duble their cst savings

and eciencies. In an era cmmditiza-

tin and glbal cmpetitin, cntinuus pr-

cess imprvement is the dierence between

surviving and thriving.1

1 Spanyi, Andrew. Business Process Management:Never Rest. Intelligent Enterprise, May 2006

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6

IMPRoVEMENT IS oNLY A PART oF MANAG-

ING PRoCESSES

Successul as they are, prcess imprvement

initiatives and ramewrks like Lean and SixSigma represent nly a part the larger cn-

text r managing the prcesses within a busi-

ness r rganizatin. In additin t imprving

individual prcesses, cmplete prcess man-

agement requires ther actins and capabili-

ties.

In cusing n prcess imprvement, CPI prac-

tices are nly a part an verall system

cmprehensive prcess management.

Cnsider the llwing:

a) Prcesses must rst exist bere they can

ever becme wasteul r suer excess varia-

tin and therere need CPI interventin t

be imprved. Cmplete prcess management

requires initial prcess design, develpment,and implementatin.

b) Managed prcesses include all types pr-

cesses: peple prcesses, system (as in cm-

puter and stware system) prcesses, and

cmbinatin r hybrid prcesses all alng a

value stream. Its nt enugh t manage r

imprve nly ne type r in ne unctinal

area.

c) The act implementing any new r changed

prcess must in itsel be well-managed. Im-

prvement initiatives demand eective strate-

gic alignment, gvernance, and prject man-

agement, requiring prject leadership,

teamwrk, cnguratin, and change man-

agement.

d) Mst imprtant, any eective, perrming

prcess must be standardized and managed t

specicatins with cntrls. CPI methdl-

gies like Lean and Six Sigma require such cn-

trls, but this part CPI tends t be under-em-

phasized.

THE LIMITATIoNS oF CPI FRAMEWoRKS LIKE

SIX SIGMA

Fr all the pwer and benets prblem-slving and prcess imprvement methds

and tls, yu cannt rely n imprvement ac-

tivities alne r the cmplete lie-cycle man-

agement yur business prcesses. CPI

ramewrks imprve specic prcesses and

address critical prblems, ne black-belt p

ect r kaizen event at a time. CPI meth

tend t create atmic units ptimized

prcesses that then must be integrated

managed within the larger cntext t imprthe entirety the business r enterprise va

stream.

Process improvement rameworks like Six Sig

typically also all short in managing broad-s

cross-unctional, and cross-organizational

cesses, and in addressing process challen

when the analysis and solutions require in

play with enterprise inormation systems. C

lenges include:

Practitiners rarely pssess the enterp

inrmatin technlgy and managem

skills needed t understand and impr

single-system prcesses, intercnnec

system-t-system prcesses, r cmbina

human-system prcesses.

Systemically insucient instrumentati

active prcesses limits the ability tea

t prperly identiy and characterize p

lems and dene areas r imprvement.

A lack access t data acrss the enterp

r thrughut a value stream restricts e

tive prcess measurements. Practitin

typically spend cnsiderable time and e

cllecting data in nn-standard and nn

peatable ways.

Prject scpe is limited, time is wasted,

errr is intrduced, because analysis simulatin tls are used -line and dat

entered manually.

CPI practices are ineective at cntr

prcesses. Manual methds inhibit the a

The Six Sigma DMAIC prcess and the

Lean/PDCA Deming cycle are eective

methds r imprving individual pr-

cesses. As CPI ramewrks, they d nt

prvide cmplete prcess management.

BPM is the cmplete ver-arching system

prcess denitin, alignment, integra-

tin and management, as well as the cy-

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ity prcess teams t sustain perrmance

gains ver the lng term.

Cmpunding these limitatins, prcesses are

nw increasingly becming mre cmplex.They span unctins, enterprises, peple, and

systems in sme cases, glbally. Fr prcess

imprvement methds t prvide value in this

larger cntext, they must be able t address

these brad challenges.

Meanwhile, the enterprise inrmatin tech-

nlgy envirnments have lng been t

cumbersme and have lacked the capability t

respnd t the needs CPI. Furthermre, pr-

cess imprvement teams and inrmatin

technlgy grups rarely nd cmmn grund

r addressing these prblems. Slutins with-

in this larger cntext have nw becme a busi-

ness imperative.

THE LIFE CYCLE oF BUSINESS PRoCESSES

Within an perating business, all peratinal

prcesses shuld be stable and perrming at

all times. Active prcesses shuld be well-de-

ned and cntinuusly managed and perrm

t specicatins. Key perrmance indicatrs

shuld be mnitred t ensure that prcesses

are wrking as desired, and that ut--cntrl

r ut--specicatin cnditins are antici-

pated and respnded t apprpriately. This is

ne the undamental tasks Business Pr-

cess Management.

But prcesses are dynamic and tend tward

instability and bslescence. N matter whatyure ding tday and hw yure ding it

yu will likely need t be ding it dierently

tmrrw.

once a prcess needs imprvement r a new

prcess needs t be develped the prven

methds CPI shuld be invked t help de-

termine the new r better prcess. The chang-

es may be large r small. They culd require

the prcess t be redened and realigned

within the business and value chain. Whatever

the change, a mdied prcess must be devel-

ped, implemented, and integrated bere it

can replace the existing prcess.

once a prcess needs imprvement r a new

prcess needs t be develped the prven

methds CPI shuld be invked t help de-

termine the new r better prcess. The chang-

es may be large r small. They culd require

the prcess t be redened and realigned

within the business and value chain. The

changed prcess must then be develped, im-

plemented, and integrated bere it can re-

place the existing prcess.

Prcess change shuld be cnducted with pre-cisin and urgency, in rder t cmplete the

update, establish the new perrming prcess,

and realize the value as quickly as pssible. A

prcess change passes thrugh ur majr

phases.

1. Identiy the need t imprve (The

decisin t change). Many actrs infuence

the decisin t imprve a prcess. These may

be internal r external. They may imply a large

change r a small ne. The decisin t changea prcess shuld be deliberate, gal-riented,

principle-based, quantiable, and tightly

scped.

. Determine the changes (using im-

prvement methds). The time-tested tech-

niques CPI shuld be used t determine

prcess imprvements. Invking a Six Sigma

DMAIC prject r cnducting a Lean kaizen

event will characterize the prblems with the

prcess, determine the prcess changes, and

dene the new prcess and standards per-

rmance. I its a new prcess, tls within

ramewrks like Lean r Design r Six Sigma

(DFSS) shuld be used. Simulatins, design

experiments, prttypes and mdels may als

be apprpriate.

3. Dene and Align. A new r revised

prcess must be dened rigrusly. The pr-

cess mdels, value-stream maps, system de-

nitins, lgic, interaces, and key perrmance

indicatrs must all be specied. Further, the

prcess as-dened must be strictly aligned

with strategic and peratinal business gals

and drivers, including the Balanced Screcard.

4. Implement and Integrate. The imple-

mentatin a new r revised prcess can in-

vlve many peple, rganizatins, acilities,

capital, material, and systems. The human and

system elements the prcess must be indi-vidually ptimized and cllectively integrated.

7

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THE EMERGING WoRLD oF PRoCESS-MAN-

AGED BUSINESS

An enterprise applies business prcess man-agement (BPM) in rder t cntinuusly im-

prve its perrmance, thrugh practive cn-

trls and agile respnses t adjusting and

ptimizing the many active prcesses which

cllectively dene its business utcmes.

The disciplined ramewrk Business Prcess

Management is the mst advanced and ma-

ture ramewrk r eecting ttal prcess ex-

cellence, representing a culminatin the

past ty years achievements in methds,

tls, and systems. It is a breakthrugh in p-

timizing large-scale cmplex adaptive sys-

tems like the mdern business.

organizatins that apply BPM leverage a

ramewrk prescriptive methds and tls.

These include inrmatin technlgies knwn

as BPM Platrms r mdeling, measure-

ment, and cntrl, as well as imprvement

methdlgies like Lean, Six Sigma, and TQM

r analysis and understanding that can be

applied within the cntext the visin and

principles the business. Cnsider the l-

lwing qute:

Leveraging the management and imprve-

ment schemes the past, BPM includes s-

phisticated systems measurement, analysis

and cntrl, as well as the means and meth-

ds r quickly adapting t changing market

and envirnmental cnditins by mdiyingprcesses and prcedures acrss an enterprise

and thrughut a glbal value chain.

BPM: THE NEXT STAGE FoR CPI

The next stage r prcess imprvement

methdlgies is the greater ramewrk

Business Prcess Management (BPM). Within

a BPM envirnment, individuals and teams

wrking with imprvement ramewrks like

Six Sigma and Lean can better leverage the

tls and techniques their trade t manage

the cmplete lie cycle all types busin

prcesses.

Tgether with advanced BPM technlgy p

rms, the CPI methdlgies underpin a

cmprehensive business prcess mana

ment ramewrk. Neither the imprvem

methds nr the BPM technlgies are su

cient by themselves, but cllectively, t

cmprise the majr supprt layers the B

system, cmbining t prvide expnenti

imprved business perrmance.

CPI Methds and Tls represent the nec

sary methdlgical undatin: the phil

phy, principles, and techniques used t gv

hw teams systematically and repeatedly

prve prcesses and

able teams t dene

sustain stable, per

ing prcesses. The

ramewrk adpted an rganizatin must

adapted t t the ve

BPM mdel r the en

A prcess-managed enterprise makes agile

curse crrectins, embeds Six Sigma quali-

ty and reduces cumulative csts acrss the

value chain. It pursues strategic initiativeswith cndence, including mergers, cnsli-

datin, alliances, acquisitins, utsurcing

and glbal expansin.

Prcess management is the nly way t

achieve these bjectives with transparency,

management cntrl and accuntability. The

prcess-managed enterprise grasps cntrl

business prcesses and cmmunicates

with a universal prcess language that en-

ables partners t execute n shared visin

t understand each thers peratins in

detail, jintly design prcesses and manage

the entire liecycle their business im-

prvement initiatives.1

1 Smith, Howard, and Peter Fingar, Business ProcessManagement: The Third Wave. Meghan-Kier Press,2003.

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Prcess Phase CPI Methds & Tls BPM Technlgy Platrm

Perrm Dene peratinal prcedures

Determine cntrl pints

Set peratinal spec limits

Dene key perrmance metrics

Create andn1 displays

Dene respnse actins

Instrument & measure active prcesses

Prvide run charts and ther graphical

perrmance indicatrs

Implement autmated respnses

Deliver Balanced Screcards

Prvide inrmatin drill-dwn

Decisin t

Imprve

Characterize prcess issues

Scpe prcess changes

Dene imprvement prject

Cllect detailed prcess metrics

Supprt analysis tls

Prvide prject management tls

Determine

Changes

Analyze prcesses

Simulate r prttype changes

Dene imprvements

Mdel prcess alternatives

Prvide analytical tls

Run simulatin and DoE tls

Dene & Align Frmally dene new prcesses

Determine custmer, crprate,

and stakehlder alignments

Update hshin plans

Mdel prcesses

Build new prcess designs

Dene pints integratin

Implement &

Integrate

Develp systems & prcedures

optimize sub-prcess

Integrate human and system

prcesses

Set new perrmance criteria

Implement system prcesses

Implement wrkfw prcesses

Integrate systems and services

Update Balance Screcards

Implement new prcess mnitrs

3 Andon is a ean term. An andon is a signal to alert people o problems at a specic place in a process a orm o visual management.Andon is a ean term. An andon is a signal to alert people o problems at a specic place in a process a orm o visual management.

Reerence ean or Dummies, Wiley & Sons, 2007.

4 Hoshin is a system o planning, orms, and rules that engages everyone in addressing business at both the strategic and tacticalHoshin is a system o planning, orms, and rules that engages everyone in addressing business at both the strategic and tactical

levels.

prise. Withut it, BPM is ree-fating and un-

grunded.

The BPM Technlgy Platrm is the cmple-

mentary set enterprise inrmatin tls andtechnlgies that acilitate applicatin CPI

methds t the business prcesses at each

phase their lie cycle. BPM technlgies help

cnnect CPI tls t prcesses. Withut the BPM

platrm, CPI tls are insucient.

During each phase the BPM lie cycle, CPImethds and tls, cmbined with BPM tech-

nlgy platrm capabilities, ulll the cm-

plete needs the prcess-managed rganiza

tin. Sme these are summarized in th

llwing table.

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BPM THE POWER OF PROCESS TO THE

PEOPLE

These enabling orces are aligning with global

orces in ways that are creating opportunitiesnever beore experienced in business. In the

midst o these great movements are the pro-

essional practitioners:

the business people who own, live, and

perorm the core business processes

the methodologists, who apply CPI tools to

address shortcomings and improve out-

comes

the inormation systems teams, who create

the technology environments that empow-

er the business people and the methodolo-

gists

There are the many other stakeholders, who

have their own needs and interests. And, ulti-

mately, there are the customers and markets

that are better served when these teams

align to deliver innovative solutions o unsur-

passed value through a process-managed

business environment.

This combination o process methodology and

process technology, within a BPM ramework

promises to uel new successes or everyone.

Consider the eects on each o the dierent

constituencies:

The Process Perormers. The individuals within

and across organizations who work in the core

business processes directly create and contrib-

ute to the success or ailure o the products

and services in their markets. Through BPM,these process perormers are increasingly

empowered by instantaneous global insight

into whats happening and the application

knowledge o whats possible. This is what

enables them to cope with the increasing ur-

gency o global competition, tighter resources,

and shrinking margins or error. For them,

BPM means more innovation, greater lever-

age o intellectual capital, more eective op-

erations, and more satised customers.

The Methodologists. Companies the world

over have built the oundations or success by

implementing ormalized process improve-

ment initiatives like ean and Six Sigma. Many

process and quality practitioners have solved

problems in product and service quality, time

to market, customer satisaction, protability,

and employee morale. The individuals, teams,

organizations, corporations, and institutions

have all beneted rom these successes, and

are ready and willing to take on the new chal-

lenges. BPM means they can combine theirsavvy and discipline with the systems world,

access to data and system processes, and op-

timize processes across the enterprise and

throughout the value chain.

The Technologists. The evolution o the tech-

nologies in BPM platorms including Enter-

prise Application Integration (EAI), Service

Oriented Architectures (SOA), workfow, pro-

cess modeling, simulation engines, codeless

development, and standards like BPMN, BPE,WSD have vaulted the Inormation Technol-

ogy community orward. No longer is the IT

sta saddled with the rustration o large bud-

gets and lengthy schedules. IT proessionals

can now assemble new processes and build

new businesses more quickly and eectively

than ever. And, combined with the method-

ological underpinnings o CPI, these new pro-

cesses and businesses will be more eective

and robust than ever beore.

The Stakeholders. Many stakeholders look in

on business rom the outside. Analysts, audi-

tors, regulators, shareholders.rom their

perspective, theyve been unable to see into

a business with sucient depth or delity.

BPM capabilities provide the outsiders with

the inormation and knowledge they seek

and the satisaction they desire without

levying onerous eorts on the perormers,

methodologists, and technologists and

thereby allowing the resources o the busi-

ness to be ocused on core processes, innova-

tion, and value creation.

The Customer! And why is all this necessary?

Because the customer demands value! Cus-

tomers and markets have decreasing toler-

ance or waste and deects, or lost time and

wasted eort, or products and services that

arent to their need or liking. BPM is important

because it helps the customer the one whomatters most.

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ABouT The AuThor

Bruce D. Williams, Senior Vice President and

General Manager, BPM Solutions, Sotware AG

Mr. Williams provides complete leadership o

webMethods BPM Solutions as Vice President

and General Manager. Bruce has more than 25

years o proessional experience in a broad range

o businesses large and small, including training,

sotware, technology and aerospace systems. He

has been a scientist, engineer, technical man-

ager, consultant, author, speaker, sales director,

executive and entrepreneur.

Previously, Mr. Williams served as President o

Savvi International, a business solutions compa-

ny specializing in business perormance im-

provement through the application o Six Sigma,

ean, and Process Management techniques. He

also co-ounded the Six Sigma Management In-

stitute (SSMI) and was the executive liaison be-

tween SSMI and the University o Phoenix Online

during the R&D initiative that migrated six sigma

training content into an asynchronous online

learning system.

Mr. Williams also co-ounded a manuacturing

sotware and solutions company, which he took

public and served as its Chie Executive or our

years. Beore this, he co-developed a successul

proessional services practice or a major inor-

mation technology company and worked with

leading businesses including Motorola and Hon-

eywell.

Mr. Williams was previously in the aerospacebusiness and was a member o the technical

team that developed and launched the Hubble

Telescope.

A graduate o the University o Colorado and

Johns Hopkins University, Mr. Williams holds a

dual Master o Engineering Management and

Computer Science. He also has a BS in Physics

and Astrophysics rom the University o Colorado.

He serves on the advisory boards o Executors

Resource, an estate settlement services compa-

ny, and Studyog, a biotech inormation systems

company.

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CoNTENTSDunt er dlestrud mlreet

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T o F I N D T h e S o F T W A r e A G o F F I C e N e A r e S T Y o u ,

P L e A S e V I S I T W W W . S o F T W A r e A G . C o M

Take the next step t get there aster.

ABoUT SoFTWARE AG

Sotware AG is the worlds largest independentprovider o Business Inrastructure Sotware. Our4,000 global customers achieve measurable busi-ness results by modernizing and automating theirIT systems and rapidly building new systems andprocesses to meet growing business demands.

Our industry-leading product portolio includesbest-in-class solutions or managing data, enablingservice oriented architecture, and improving busi-ness processes. By combining proven technologywith industry expertise and best practices, ourcustomers improve and dierentiate their busi-nesses aster.

Sotware AG Get There Faster

007 Stware AG. All rights reserved. Stware AG and all Stware AG

prducts are either trademarks r registered trademarks Stware AG. other

prduct and cmpany names mentined herein may be the trademarks their

respective wners.

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