L4 - Business process management

Question 1

What is a process?

Answer 1

A process is an interrelated, sequential set of activities and tasks that turn inputs into outputs.

Not necessarily linear - several activities can be performed at the same time

Processes extend across many organizational boundaries (cross-functional) and tend to involve several individuals.

All-or-nothing concept - a process needs to be completed or not done at all

Business processes can be decomposed into sub-processes

Question 2

What is a well-defined process?

Answer 2

a beginning and an end - An end-to-end business process begins with a customer’s needs and ends with a customer’s needs fulfilment.

inputs and outputs

a set of tasks (sub-processes or activities) that transform the inputs into outputs

a set of metrics for measuring effectiveness

a set of associated roles and responsibilities

Question 3

What is the functional/silo perspective and what are the advantages?

Answer 3

Typical organisation structure - arranged by function

Self-contained functional units:

o optimize expertise and training

o avoid redundancy in expertise

o (are easier to benchmark with outside organizations)

o make it easier to understand the role of each unit

Question 4

What are the disadvantages of the functional/silo perspective?

Answer 4

Creation of silos

The functional perspective can introduce challenges when handing over tasks between departments:
Communication gaps between departments - duplication of work – or forgotten work

Lost information in business processes – execution errors

The functional perspective invites to “sub-optimization”:

Each department tends to lose sight of the overall objective of the organization and operate in a way that maximizes their local goals

Losing the big picture means losing business effectiveness

Customers and stakeholders are not well served

Question 5

What is the process perspective?

Name 4 advantages

Answer 5

Allows to focus at the work that must be done to ensure optimal creation of value - i.e. mitigate weaknesses of functional perspective

Avoid or reduce duplicate work, facilitate cross-functional communication, optimize business processes, and best serve the customers and stakeholders.

Question 6

When the business strategy is changed with the objective to increase competitiveness the business processes and information systems are to be changed accordingly

What is the link between processes and IS?

Answer 6

IS can:
› drive change – because new information systems will require change
› inhibit change – if the business processes are not able to be adapted to a strategy change because they rely on inflexible silo systems

Transformation requires discontinuous thinking.
› Recognizing and shredding outdated rules and
fundamental assumptions that underlie operations.

Question 7

Explain the connection between the IS Strategy Triangle and BPM.

Answer 7

Business process management is about process improvements and help create alignment between the different strategies in the IS strategy triangle

Question 8

What is process modelling?

Answer 8

Mapping the processes and subprocesses used in an organisation or division

A process model should clearly describe what happens as a process is performed

Process modelling usually results in “levels” of process models

Question 9

What is the role of technology in business processes?

Answer 9

Not only enabling, also constraining

E.g. legacy systems - older, larger applications that may be mission critical. Hard to replace and somewhat inflexible. Often used to support key business processes

Question 10

What is BPR?

Answer 10

BPR involves the redesign of business processes to improve how work is done - means that BPR requires that business process modelling be done well first.

BPR often involves changing the way tasks are performed instead of just automating the tasks

Thinking about what is done, how it is done, should it be done?

Question 11

What are key areas for business improvement management?

Answer 11

Effectiveness - The extent to which the expected outputs of the process are obtained as expected. The relationship between output and target (produce the output that supports the target). Doing the right things. Associated with meeting strategies and objectives. A process is effective if it delivers product that matches our target

Efficiency - The average time it takes for the process to be completed. The relationship between output and input (amount of output per input). During the things right. Performing or functioning with the least waste of time and effort. Associated with costs, power and energy, labour and operations

Internal control - it possible to change data by error or illegally during execution of the process? Make sure people do not make mistakes or do something illegal

Compliance - does the process comply with the regulatory or statutory obligations of the organization? Also includes e.g. GDPR

Question 12

What are three levels of change?

Answer 12

Automate (first order change) - perform more efficiently, usually easy to justify

Informate (second order) - using technology to better inform people

Transform (third order) - fundamental redefinition of business processes (e.g. BPR). Can also include the two latter. Relates to effectiveness

Question 13

Explain what a business process is and three types of business processes

Answer 13

A business process is: “a collection of related, structured activities or tasks that produce a specific service or product (serve a particular goal) for a particular customer or customers”
An end-to-end business process begins with a customer’s needs and ends with a customer’s needs fulfillment.

Management processes - govern the operation of a system. Includes “Strategic Management“ and “Risk Management”.

Core/operational processes - constitute the core business and create the primary value stream. Examples: Purchasing, Manufacturing, Marketing, and Sales.

Support processes - supporting the core processes. Examples: Recruitment and Technical support.

Question 14

How can we change business processes through incremental process improvement?

Answer 14

Prerequisite: These approaches view the business as a set of business processes rather than using a silo perspective.

Business processes improved through small, incremental changes

Choose a business process to improve, choose a metric by which to measure it

Get input from employees on how to improve the process based on the metric

Question 15

When to use business process reengineering

Answer 15

Prerequisite: These approaches view the business as a set of business processes rather than using a silo perspective.

Used when the current process objective is to be changed, e.g. when implementing a new strategy

Appropriate for addressing cross-functional processes

The goal is to make a rapid, breakthrough impact on key metrics

Question 16

What is BPM?

Answer 16

BPM is a management discipline that treats business processes as assets to be valued, designed and exploited in their own right

BPM is a structured approach employing methods, policies, metrics, management practices and software tools to manage and continuously optimize an organization’s processes

BPM aims to improve agility and operational performance

BPM treats processes as organizational building blocks with as much (if not more) significance as functional areas and geographic territories

A combination of BPI (incremental change, business process improvement) and BPR (radical change) - ”an integrated system for managing business performance by managing end-to-end business processes”

Question 17

Why do companies adopt BPM?

Answer 17

Enterprises adopt BPM because they anticipate frequent process changes.

Question 18

What is the process management cycle?

Answer 18

(1) Starts at the bottom with the creation of a formal process
(2) Once a process is in place, it needs to be managed on an ongoing basis.

o Measurement of process performance

o Sense customer needs and expectations

o Benchmark against the competitors

(3) Performance needs to be compared to the targets

Processes fail to meet performance for 2 reasons:

o Faulty design - usually easy to find but hard to fix, happens many times

o Faulty execution - usually hard to find but easy to fix

(4) Develop plan and fix errors
(5) Re-iterate cycle

Question 19

Benefits of process management (2 operational, 2 strategic)

Answer 19

Operational benefits

o Consistency, cost, speed, quality, and service

o Translate into lower operating costs and improved customer satisfaction

Strategic benefits

o Process metrics allow responding to change faster

o Linking of improvement efforts under one common umbrella

Question 20

There are five critical enablers for a high-performance process; without them, a process will be unable to operate on a sustained basis. What are they?

Answer 20

Process design - the specification of what tasks are to be performed, by whom, when, in what locations, under what circumstances, to what degree of precision, with what information, and the like.

Process metrics - end-to-end metrics that are derived from customer needs and enterprise goals. Targets need to be set in terms of these metrics and performance monitored against them. A balanced set of process metrics (such as cost, speed, and quality) must be deployed, so that improvements in one area do not mask declines in another.

Process performers - people who work in processes need certain skills and behaviours - need understanding of the overall process and goals, to work in teams, manage themselves

Process infrastructure - Integrated systems (such as ERP systems and results-based compensation systems) are needed for integrated processes.

Process owner - must have, senior managers with authority and responsibility for a process across the organisation as a whole - responsible for an end-to-end process

Question 21

What are four critical capabilities that are prerequisites to its summoning the resources, determination, and skills needed to succeed with processes?

Answer 21

Leadership - introducing processes means enormous change - Moreover, only a topmost executive can authorize the significant resources and changes that process implementation requires. Without such leadership, the effort is doomed; with it, all other problems can be overcome

Culture - Process demands that people at all levels of the organization put the customer first, be comfortable working in teams, accept personal responsibility for outcomes, and be willing to accept change - culture must be aligned with this (leadership can change culture, so it does)

Governance - requires a set of governance mechanisms that assign appropriate responsibilities and ensure that processes integrate with one another. Need process office - plans oversees program as a whole and coordinates process efforts and a process council (consists of the process owners, the executive leader, and other senior managers, which serves as a strategic oversight body, setting direction and priorities, addressing cross-process issues, and translating enterprise concerns into process issues)

Expertise - need people with deep expertise in process design and implementations, metrics, change management, program management, process improvement, and other relevant techniques. These people must have formal methodologies to follow and must be sustained with appropriate career paths and management support.

Question 22

Effectiveness vs. efficiency

Answer 22

Efficiency - The relationship between output and input (amount of output per input)

• Minimize time
• Minimize cost
• Minimize use of resources

Effectiveness – The relationship between output and target (produce the output that supports the target)

• Support business strategies
• Allows execution of business processes
• Strengthen organisation structure and - culture
• Increase value for customers

Efficient: Performing or functioning with the least waste of time and effort
Efficiency is associated with costs; power and energy; labour; and operations

Effective: Adequate to accomplish a purpose; producing the intended or expected result
Effectiveness is associated with meeting strategies and objectives

Question 23

What does it mean that all work is process work?

Answer 23

Any process is better than no process!
› A process creates predictable, repeatable results that can be improved

A good process is better than a bad process!
› Good (and improving) design of processes is crucial for organizational success

One process version is better than many!
› Standardization is key and allows comparison, easy learning and transfer across boundaries

Even a good process must be performed effectively!
› Managing and measuring execution is half of the deal

Even a good process can be made better! Every good process eventually becomes a bad process!
› The environment is dynamic and constantly changing – today’s top-notch process can be outdated tomorrow

Question 24

How do employees often react to business process improvement and business process reengineering?

Answer 24

BPI: Employees often react favourably to incremental change as they gain control and ownership of improvements and thus render change less threatening

BPR: Usually faces greater internal resistance - hence, requires careful planning and used only when major change is needed in a short time