Chapter 01 Introduction To BPM Fundamentals of BPM 2nd Edition
Chapter 01 Introduction To BPM Fundamentals of BPM 2nd Edition
Contents
1. Processes Everywhere
2. Ingredients of a Business Process
3. Origins and History of BPM
1. The Functional Organization
2. The Birth of Process Thinking
3. The Rise and Fall of BPR
4. The BPM Lifecycle
5. Recap
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Chapter Overview
▪ Business Process Management (BPM) is the art and science of overseeing how work is
performed in an organization to ensure consistent outcomes and to take advantage of
improvement opportunities.
▪ The term “improvement” may take different meanings depending on the objectives of the
organization, e.g. reducing costs, reducing execution times, and reducing error rates, but also
gaining competitive advantage through innovation.
▪ Improvement initiatives are one-off or continuous; incremental or radical.
▪ BPM is about managing processes, i.e. entire chains of events, activities, and decisions.
▪ In this chapter, we describe typical processes that are found in contemporary organizations.
▪ We provide a definition of business process and BPM.
▪ We then provide a historical overview of the BPM discipline.
▪ Finally, we discuss the BPM lifecycle, around which the book is structured.
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Chapter 1: Introduction to BPM
Contents
1. Processes Everywhere
2. Ingredients of a Business Process
3. Origins and History of BPM
1. The Functional Organization
2. The Birth of Process Thinking
3. The Rise and Fall of BPR
4. The BPM Lifecycle
5. Recap
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Examples of Processes in Many Organizations
▪ Order-to-Cash
▪ Quote-to-Order
▪ Procure-to-Pay
▪ Issue-to-Resolution
▪ Application-to-Approval
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Example: Construction Company BuildIT
▪ When a works engineer approves a rental request, the clerk sends a confirmation to the
supplier. This confirmation includes a Purchase Order (PO) for renting the equipment. The PO
is produced by BuildIT’s financial information system using information entered by the clerk.
The clerk also records the equipment rental in a spreadsheet that is used to monitor rentals.
▪ In the meantime, the site engineer may decide that the equipment is no longer needed. In this
case, the engineer asks the clerk to cancel the request for renting the equipment.
▪ In due time, the supplier delivers the rented equipment to the construction site. The site
engineer then inspects the equipment. If everything is in order, the site engineer accepts the
engagement and the equipment is put into use. In some cases, the equipment is sent back
because it does not comply with the requirements of the site engineer. In this case, the site
engineer has to start the rental process all over again.
▪ When the rental period expires, the supplier comes to pick up the equipment. Sometimes, the
site engineer asks for an extension of the rental period by contacting the supplier via email or
phone one to two days before pick-up. The supplier may accept or reject this request.
▪ A few days after the equipment is picked up, the supplier sends an invoice to the clerk by email.
At this point, the clerk asks the site engineer to confirm that the equipment was indeed rented
for the period indicated in the invoice. The clerk also checks if the rental prices indicated in the
invoice are in accordance with those in the PO. After these checks, the clerk forwards the
invoice to the financial department. The financial department eventually pays the invoice.
Chapter 1: Introduction to BPM
Contents
1. Processes Everywhere
2. Ingredients of a Business Process
3. Origins and History of BPM
1. The Functional Organization
2. The Birth of Process Thinking
3. The Rise and Fall of BPR
4. The BPM Lifecycle
5. Recap
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Definition of Business Process
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Ingredients of a Business Process
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Exercise 1.1: University Admission Process
▪ Consider the process for the admission of international graduate students at a university.
▪ In order to apply for admission, students first fill in an online form. Online applications are
recorded in an information system to which all staff members involved in the admissions
process have access. After a student has submitted the online form, a PDF document is
generated and the student is requested to download it, sign it, and send it by post together with
the required documents, which include:
▪ certified copies of previous degree and academic transcripts,
▪ results of English language test,
▪ curriculum vitae,
▪ two reference letters.
Exercise 1.1: University Admission Process
▪ When these documents are received by the admissions office, an officer checks the
completeness of the documents. If any document is missing, an email is sent to the student.
The student has to send the missing documents by post. Assuming the application is complete,
the admissions office sends the certified copies of the degrees to an academic recognition
agency, which checks the degrees and gives an assessment of their validity and equivalence in
terms of local education standards. This agency requires that all documents be sent to it by
post, and that all documents be certified copies of the originals. The agency sends back its
assessment to the university by post as well. Assuming the degree verification is successful,
the English language test results are then checked online by an officer at the admissions office.
If the validity of the English language test results cannot be verified, the application is rejected
(such notifications of rejection are sent by email).
Exercise 1.1: University Admission Process
▪ Once all documents of a given student have been validated, the admissions office forwards
these documents by internal mail to the corresponding academic committee responsible for
deciding whether to offer admission or not. The committee makes its decision based on the
academic degrees and transcripts, the CV, and the reference letters. The committee meets
once every three months to examine all applications that are ready for academic assessment at
the time of the meeting.
▪ At the end of the committee meeting, the chair of the committee notifies the admissions office
of the selection outcomes. This notification includes a list of admitted and rejected candidates.
A few days later, the admissions office notifies the outcome to each candidate via email.
Additionally, successful candidates are sent a confirmation letter by post.
▪ With respect to the above process, consider the following questions:
1. Who are the actors in this process?
2. Which actors can be considered as customers in this process?
3. What value does the process deliver to its customers?
4. What are the possible outcomes of this process?
Definition of Business Process Management
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Related Disciplines
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Related Disciplines
▪ Lean
▪ Originates from manufacturing, in particular Toyota Production System.
▪ Eliminates waste, i.e., activities that do not add value to the customer.
▪ BPM puts more emphasis on use of information technology as a tool to improve
business processes and to make them more consistent and repeatable.
▪ Six Sigma
▪ Originates from manufacturing, in particular from production practices at Motorola.
▪ Focuses on minimization of defects (errors).
▪ Strong emphasis on measuring output of processes, especially in terms of quality.
▪ Popular approach to blend Lean with Six Sigma, leading to Lean Six Sigma.
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Chapter 1: Introduction to BPM
Contents
1. Processes Everywhere
2. Ingredients of a Business Process
3. Origins and History of BPM
1. The Functional Organization
2. The Birth of Process Thinking
3. The Rise and Fall of BPR
4. The BPM Lifecycle
5. Recap
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How process moved out of focus through ages
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Adam Smith: Processes and Division of Labour
“To take an example, the trade of a pin-maker: But in the way in which this
business is now carried on, it is divided into a number of branches:
• One man draws out the wire; another straights it;
• a third cuts it; a fourth points it; a fifth grinds it at the
• top for receiving the head; to make the head requires
• three operations; to put it on is a peculiar business;
• to whiten the pins is another; to put them into the paper;
and the important business of making a pin is, in this
manner, divided into about eighteen distinct operations.”
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Purchasing process at Ford at the initial stage
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Purchasing process at Ford after redesign
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The Rise and Fall of BPR
1. Concept misuse:
▪Projects were labeled BPR, even when business processes were not the core.
▪Many corporations initiated reductions of workforce, often packaged as process
redesign projects, which triggered resentment.
2. Over-radicalism:
▪ Hammer’s early papers states: “Don’t Automate, Obliterate”.
▪ Many situations require a much more gradual (incremental) approach.
3. Support immaturity:
▪ Necessary tools and technologies were not yet available or insufficient.
▪ Much process logic had to be hard-coded in IT applications of the time.
▪ People grew frustrated when they noted that their efforts on redesigning a
process were thwarted by a rigid infrastructure.
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Reshaping Process Thinking
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Job Functions of Process Owner
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Chapter 1: Introduction to BPM
Contents
1. Processes Everywhere
2. Ingredients of a Business Process
3. Origins and History of BPM
1. The Functional Organization
2. The Birth of Process Thinking
3. The Rise and Fall of BPR
4. The BPM Lifecycle
5. Recap
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Establishing Process Thinking in Organizations
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Example: Process model for the initial
fragment of the equipment rental process
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The BPM Lifecycle
Management Processes
les for BPM lifecycle and process mining identification Core Processes
A E
D
5m 3m 5m 10m 30m 2h 10m
15m
C
1.5h 10min
Conformance and Process As-is process
performance
discovery model
insights
A B C D E
Process Process
monitoring analysis
Executable Insights on
process weaknesses and
model their impact
Process Process
implementation To-be process redesign
model
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Stakeholders in the BPM Lifecycle
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Stakeholders in the BPM Lifecycle
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Chapter 1: Introduction to BPM
Contents
1. Processes Everywhere
2. Ingredients of a Business Process
3. Origins and History of BPM
1. The Functional Organization
2. The Birth of Process Thinking
3. The Rise and Fall of BPR
4. The BPM Lifecycle
4. Recap
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Recap
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