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Vol. 23, No. 2 February 2010

“Perhaps BPM evolved relatively slowly for the first 40 Business Process Management: years because it was mostly practiced by IT people. Now The Missing Link Between that the business is begin- Business and IT? ning to recognize its responsibility to direct the effort, Just Another Buzzword An Essential Business-IT Link

BPM can be reenergized.” IT needs workflow diagrams to understand Business processes provide IT with the — Claude R. Baudoin, what systems to deploy, but they are just a requirements to enable the enterprise’s new format for documenting use cases. So operations, growth, and transformation. Guest Editor many people are talking about BPM instead BPM is no mere fad but the new place of doing the work of creating and improving where the business and IT collaborate so systems that it’s a wonder anything actually the enterprise can work smarter and faster. gets done.

Opening Statement by Claude R. Baudoin ...... 3

Business Process Management: The New Old Thing? by Paul Clermont ...... 6

The Business Analyst Skill Gap by Kevin Brennan ...... 12

What BPM Hat Are You Wearing? Perspectives on Business Process Management by Ian Gotts ...... 18

Value Chain Modeling: Linking Customer Value to Business Process Design and Automation by Fred Cummins ...... 23

A Quantitative Approach to Process Improvement by Matthew Ganis and Lekha P. Panikulangara ...... 31

Runtime Collaboration and Dynamic Modeling in BPM: Allowing the Business to Shape Its Own Processes on the Fly by Sandy Kemsley ...... 35 Cutter IT Journal

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by Claude R. Baudoin, Guest Editor

Is business process management (BPM) really more than that its goal is not just to draw pretty diagrams the analysis, documentation, simplification, and auto- (process descriptions), but really to help analyze mation of workflows — a notion that dates back several and perform processes (process models). decades? BPM meant “business process modeling” as far The BPM Consortium, “an advocacy group and back as 1967, the year S. Williams published an article community of BPM Practitioners, visionaries, and in Automation titled “Business Process Modeling authorities,” also managed by the OMG, listed 66 Improves Administrative Control.”1 That concept members in 2009. merged with business process improvement (BPI) and business process reengineering (BPR), but the last A significant market in BPM consulting and tools has term was soon doomed when it became a euphemism emerged, especially with the BPM suites offered by for outsourcing — and therefore domestic job cuts. some companies. The BPM Consortium Web site lists close to 200 “BPM vendors.” Of course, not all of During the 1990s, the focus was on designing new work- them offer services or products at the same level. flows or simplifying existing ones using various flowchart notations. A colleague showed me the TeamFlow More recently, we have seen the emergence of product (from CFM Inc.) in 1992, exposing me to the “BPM as a service,” consisting of cloud-based offer- “swim lane” representation of process flows, and I used ings on a subscription basis; some companies even it on and off in my work until 2003. During the last offer BPM freeware. decade, we started looking at the entire lifecycle of busi- It is also a positive development that BPM and service- ness processes (design, modeling, execution, monitoring, oriented architecture (SOA) are converging. It now optimization — not necessarily performed in that order), seems well accepted, after about five years of discussion, which resulted in the broader, more ambitious scope we that SOA is not a technology for technology’s sake, but tend to associate with BPM today. The M for “manage- an approach to the modular delivery of business capa- ment” indicates that the focus has shifted from a docu- bilities in the form of services. And to understand what mentation activity, typically driven by IT, to a business business capabilities are required, a focus on business responsibility in which processes are monitored and process is clearly needed. Reflecting this convergence, managed against key process indicators (KPIs). the BPM Consortium and SOA Consortium recently This larger meaning of BPM also encompasses capa- announced their merger. The two disciplines, separated bilities to simulate processes directly from the models, at birth, should be reunited. and/or to actually execute them without having to write Yet there are unresolved questions about the effective application code, typically by converting the model to scope of BPM — in particular, whether the process exe- the Business Process Execution Language (BPEL). cution and measurement aspect is as “ready for prime The following events indicate that BPM has, at least to time” as the process design aspect — and about who some extent, penetrated the business and IT cultures: should be in charge. The scope ambiguity is reflected in the difficulty one encounters when searching for a The BPM Initiative (since absorbed into the Object clear, authoritative definition of BPM. Even the BPM Management Group [OMG]) originated the Business Consortium’s Web site is not entirely limpid about this, Process Modeling Notation (BPMN), whose first and the Wikipedia definition reads more like an advo- version was developed between 2001 and 2006. cacy piece for a specific methodology than a consensus When concepts are still in flux, standardization can definition. be premature, but when industry participants agree on a standard notation, it validates the fact that the Definitions are just words, and one could brush off the concepts have become broadly accepted. Recently, lack of clarity by paraphrasing the famous words of a BPMN has evolved, and a subtle name change — to US Supreme Court justice: “I don’t know how to define “Business Process Model and Notation” — indicates BPM, but I know it when I see it.” On the other hand,

Get The Cutter Edge free: www.cutter.com Vol. 23, No. 2 CUTTER IT JOURNAL 3 ambiguity about roles and responsibilities is a more The detailed analytical skills required for process fundamental issue. The correct choice of who should lead analysis and improvement are more present in the the effort can determine the success or failure of the ini- enterprise architects (in IT) than among business tiative, or at least its ability to create an effective alliance managers. between the business and IT. Logically, BPM should be The techniques of business process modeling and owned by the business, because it’s not just about driving execution are seen as the province of IT. Business- the requirements for IT systems. It should be primarily people may spend hours polishing their PowerPoint about understanding and improving the processes, even presentations or debugging their Excel functions, but if they are executed on notepads and stickies, not on they usually think it is beneath them to learn to use computers. When this is the case, BPM is related to the a process modeling tool. role of “business architect,” a relatively new term for someone who has both the domain knowledge and the IT therefore “wins” by default. Since they need the analytical skills to formalize the analysis and design of models and no one else will supply them, the analysts the business organization and its governance. have to step in and create them, interviewing users if they are available or “reverse engineering” the process In practice, however, many BPM efforts are led by IT, models from the existing applications if not. specifically by the business applications group or sometimes by the enterprise architecture (EA) team. This is In this issue of Cutter IT Journal, we aim to bring a not because BPM is in fact an IT concept, but because balanced perspective to the definition, scope, benefits, of a pathological combination of factors: opportunities, and challenges of BPM. We asked our contributors to consider several key questions: IT analysts need business process descriptions in order to generate the use cases that drive system How can organizations employ BPM most effectively requirements. to maximize business performance?

The business is often, paradoxically, too busy exe- What role does BPM play in facilitating a real collab- cuting the current suboptimal processes to have, or oration between IT and the business? Does it help take, the time to improve them. (Hence the sarcastic both sides speak a common language and bridge maxim, “We don’t have the time to do it right, but their conceptual and communication gaps? we sure have the time to do it again.”) Alternately, is the only real outcome of the BPM fad the emergence of a notation and tools to document processes? (While this is undeniably useful, it is not new and is much less strategic than some ambitious UPCOMING TOPICS IN CUTTER IT JOURNAL definitions of BPM would lead you expect.)

MARCH How do you educate both the business and IT to Bob Furniss understand their respective roles in managing the complete lifecycle of business processes? Cultivating Leadership Throughout the IT Organization What are the real strengths that can be leveraged today, as opposed to vendor hype about BPM suites? APRIL What are the success and failure stories? How can Jens Coldewey BPM be improved? Software Programming as Craft: How do you get started? Should you pilot BPM The Impact of Agile Engineering Practices on new processes, simple processes, troubled processes, or…? MAY What combination of technical and business skills Claude R. Baudoin should be required to ensure a successful BPM effort? Business Process Management: Alternative Views What are some good examples of BPM and SOA JUNE complementing each other? Dave Higgins In the following articles, seven authors from very Business Intelligence 2010 diverse backgrounds will help you understand and explore — if not entirely resolve — some of the challenges and myths affecting the current preoccupation

4 CUTTER IT JOURNAL February 2010 ©2010 Cutter Information LLC with BPM. Their thoughtful analyses provide guidance Kemsley gives us two examples of products that include to those who wish to raise the awareness of business such capability. processes in their organizations and arrive at better con- As you can see, five out of six of the articles refrain trol over their design, execution, monitoring, and opti- from ambitious projections of what BPM can achieve, mization. focusing instead on clearly defining the discipline and We start with Paul Clermont, who paints a very useful what people can expect and specifying what skills they picture of the reasons that business process manage- must possess. However, it would be wrong to think that ment (in the generic sense) often failed in the past and BPM has stood still since Williams’s 1967 Automation how BPM emerged as a discipline to fix the past short- article. For one thing, the careful exposé of the defini- comings. Clermont outlines what BPM should and tions and requirements offered by our contributors is should not be and specifies the requirements for BPM needed and useful, especially because of a renewed teams to succeed. interest in putting the business owners back in the driver’s seat. Perhaps BPM evolved relatively slowly Next, Kevin Brennan takes on the challenge of further for the first 40 years because it was mostly practiced by defining the skills needed for BPM. He defines the role IT people. Now that the business is beginning to recog- of the “business analyst” and lists the competency areas nize its responsibility to direct the effort, BPM can be needed in that position. He then analyzes the skills gap reenergized. that often hinders effective BPM and proposes a method to assess and improve the business analyst’s skills. In fact, BPM has become such an important topic in the last couple of years that six articles, even of the highest Ian Gotts recognizes that BPM means different things quality, cannot do justice to the topic or answer all the to different people, and instead of just bemoaning the questions we posed earlier. This is why another issue of confusion between these definitions, he exploits the Cutter IT Journal, in a few months, will offer additional distinctions by identifying four audiences for BPM — perspectives from other authors on this key subject. end users, the IT department, IT system suppliers, and Meanwhile, the six articles in this issue will help you risk/compliance management — and assigning each a correctly position your BPM initiative as an effort that different colored hat. This scheme allows him to discuss can help bridge the common divide between the busi- the various models of the business and the connections ness and IT. They paint a picture of a discipline that is that must exist between them. not just about drawing pretty diagrams, but about get- Then, Fred Cummins positions business processes in ting closer to the elusive goal of the model-driven, the context of value chain analysis, a technique first real-time enterprise. introduced in 1985 but made more relevant now by the increased complexity of “extended enterprise” structures. Value chain modeling ensures that we keep ENDNOTE focusing on delivery of customer value and optimize 1Williams, S. “Business Process Modeling Improves processes across multiple lines of business, not just Administrative Control.” Automation, December 1967, within operational or functional silos. pp. 44-50.

Matthew Ganis and Lekha Panikulangara draw on the Claude R. Baudoin is a Senior Consultant with Cutter Consortium’s popularity of project retrospectives to advocate their Business-IT Strategies, Innovation & Enterprise Agility, and Sourcing use for process improvement. Quantitative measures & Vendor Relationships practices. Mr. Baudoin is a proven leader of process efficiency are hard to come by, so Ganis and and visionary in IT and knowledge management (KM) with extensive Panikulangara use statistics about the nature and sub- experience working in a global environment. Prior to becoming an ject of comments made during retrospectives to meas- independent consultant, he was employed by Schlumberger, an oilfield ure and improve BPM efforts. services company, in various positions, including serving as IT and KM Advisor. Mr. Baudoin is coauthor of two books: Realizing the Finally, Sandy Kemsley goes for the gold by painting Object-Oriented Lifecycle and Méthodes de Programmation. a picture of dynamic adaptation of processes on the fly. He has served as Guest Editor for Cutter IT Journal, presented at In this vision of the model-driven enterprise, business international IT events, and holds two patents. Mr. Baudoin has an users and managers can tune their own processes with- MS in computer science from Stanford University and an undergrad- out having to go through the typical IT project life- uate degree in engineering from the Ecole Polytechnique (Paris). He has served on the program committee for Tools Europe in 2007, 2008, cycle to make changes. A key component of this new and 2009 and been a member of ACM since 1977. Mr. Baudoin can be approach to agility is explicit and documented collabo- reached at [email protected]. ration between the actors as they execute the processes.

Get The Cutter Edge free: www.cutter.com Vol. 23, No. 2 CUTTER IT JOURNAL 5 EVER SMARTER EVERY DAY

Business Process Management: The New Old Thing? by Paul Clermont

WHAT ARE WE REALLY TALKING ABOUT in manufacturing. This is the notion that things can WHEN WE SAY “BPM”? always be done better, and it’s a manager’s responsi- “Business process management” without the capital bility to ensure that ideas for doing so are generated, letters is hardly a new idea; it’s not just old, it’s ancient. evaluated, and, as appropriate, implemented. The Every business (and government body and not-for- broadest view goes beyond this to include radical profit) has always done it. Isn’t a “process” just a logical change — that is, discontinuous improvement, which grouping of activities? And didn’t mankind long ago is usually the result of some new technology becom- learn that activities without “management” invariably ing available and affordable (see “It’s Not Always become inefficient, unpredictable, and ultimately Technology” sidebar).

chaotic? Why now the spate of attention, the newly cap- Failure to recognize and exploit opportunities for italized letters, and the inevitable acronym? Business radical change that an enabling technology — in Process Management (BPM) is important because past this case, IT — provides. In too many organizations, business process management (in lower case) has too internal IT providers were peripheral participants often fallen short. Specifically, it has suffered from: rather than advocates of change. In retrospect, this

Unhelpfully defined processes. A process is not a seems paradoxical, but there are reasons for it, as function or a product line or a location, but those we’ll soon see. tend to define the boundaries in most enterprises’ The first purpose of this article is to make the case that organization charts. That may make sense from the business process management (lowercase) is an old idea viewpoint of maximizing internal efficiency through that’s still as fresh as this morning because it’s basic specialization, but it can make an enterprise hard to common sense. But as we know, common sense is do business with. For example, shipping is a func- sometimes not that common — hence, Business Process tion, while order fulfillment is a process of which Management. If capital letters and an acronym help us shipping is but one component. As my customer, make common sense more common, so be it. The goal you don’t care about my organization chart. You just of BPM, simply put, is to work ever smarter every day. want to know, right now, in one transaction, when BPM can and must be a way to take full advantage of you’ll get your stuff, even if it’s coming from more people’s creativity and cleverness, leveraged with tech- than one location and includes items from multiple nology, to accomplish ever more with ever less effort, product lines. So setting process boundaries wrong ever faster and with ever better quality. When our means you’re managing the wrong things from the enterprises have to compete in a constantly more glob- viewpoint of competitive service to customers. alized marketplace, business process inertia is a luxury (The term “customer” could be expanded to “stake- we can’t afford. The second purpose is to flesh out what holder,” thus including governments, regulators, BPM is and is not. The third purpose is to use the expe- communities, unions, etc., not to mention senior rience of recent years to generate ideas for making BPM managers needing good information. What all these business as usual, not just another fad. have in common is the ability to impact success.)

Too narrow a definition of “management.” The BUSINESS PROCESS THINKING: A BRIEF HISTORY narrowest view of process management is that the process is made to work reliably; the trains run on From the vantage point of 2010, IT and BPM seem time every day, but hatching ideas to improve their like natural partners. They are, but they weren’t configuration and scheduling is above the manager’s always. Up through the late 1970s, data processing pay grade. A broader view encompasses the “contin- (as it was then called) primarily addressed functions — uous improvement” mantra the Japanese taught us payroll, accounts receivable, inventory control, and so

6 CUTTER IT JOURNAL February 2010 ©2010 Cutter Information LLC forth — displacing armies of clerks with narrowly tar- geted computer systems that ran in periodic batches, IT’S NOT ALWAYS TECHNOLOGY producing stacks of printouts that were out of date long before their ink was dry. The impact on processes was Discontinuous improvement is not just sparked by technology. minimal. Information for end users existed on paper, Plain old out-of-the-box thinking — such as identifying and just as it had for generations. eliminating low-value activities — can be quite powerful, It wasn’t until the 1980s that online real-time comput- too. One automaker made an agreement with its headlight ing became affordable enough to be widely practical supplier to simply pay for two headlights for every car that beyond such niches as airline reservations and banking. left the plant, thus eliminating purchase orders, physical It enabled easy access to up-to-the-minute, accurate count at the receiving dock, and reconciliation of invoices. information from anywhere, no matter how far-flung They paid the vendor slightly more per bulb for this the enterprise. Because so much of what went on in arrangement, thereby sharing the benefits. existing processes had been designed to work around the lack of reliable information, radical simplification, often integrating across functions, became possible. improvement, but what were the hallmarks of a really Yet for IT people to push very hard in addressing or good process?4 While the examples Hammer et al. cited even identifying these new possibilities was politically were illustrative and inspiring, they didn’t create any- perilous; doing so almost always would bring into ques- thing like a formal discipline. Good luck was a neces- tion the boundaries of well-established fiefdoms. Also, sary ingredient, and only a minority of the efforts were given the stereotypical IT department’s (and its vendors’) deemed successful. reputation for overpromising and underdelivering, IT managers were not well positioned to take this on. Nonetheless, reengineering became a fad. Everyone claimed to be doing it, no matter how trivial the change. The case for IT as critical to the enterprise was both When it became a euphemism for downsizing by the challenged and bolstered in the mid-1980s, when econo- mid-to-late 1990s, it lost all meaning. mists started asking fundamental questions about just what all the billions invested in IT over the years had Fortunately, the flameout of reengineering was in name actually accomplished. Answers were discouraging. only, as good things continued to happen to processes (As Nobel laureate Robert Solow of MIT once quipped, anyway: “Computers show up everywhere but the productivity The Internet opened up whole new ways of doing statistics.”) Sometimes it was because people hadn’t business that were better from the customer’s view- done a good job of designing measures of value, but point, while dramatically lowering unit transaction too often the benefits were indeed meager. For example, costs for the vendor. Radical process change was entering data online from paper in the back office forced on organizations that wanted to compete. (instead of onto punch cards) was no big deal compared with entering it online in the front office without the Huge multifaceted software suites such as those for paper in between. Some researchers concluded that enterprise resource planning (ERP), supply chain significant IT value depended on “cross-functional inte- management (SCM), and customer relationship man- gration,”1 as between front and back offices, a departure agement (CRM) became available. They integrated from the function-focused IT of the early years. across functions and were often highly prescriptive about how to design processes. Did they force their It’s Hammer Time prescriptions down customers’ throats? Sometimes, and probably for the better. Enterprises that had Process-oriented thinking got a jump start when never used anything like ERP before were wise to 2 Michael Hammer’s 1990 manifesto launched the consider and embrace the new ways that their ERP business process reengineering movement. It was vendor had thought long and hard about rather than followed by his wildly popular book Reengineering assuming they knew better.5 In effect, these applica- 3 the Corporation. These seminal documents launched a tions preempted reengineering. whole new movement to dramatically improve how enterprises worked. Technical innovations such as middleware and encapsulation simplified the daunting task of While reengineering produced some good results, integrating incompatible legacy systems and data- it lacked a coherent framework. Processes needed bases originally designed only to support functions.

Get The Cutter Edge free: www.cutter.com Vol. 23, No. 2 CUTTER IT JOURNAL 7 Finally, some enterprises simply outsourced customer’s perspective and introduce possibly relevant processes they felt were not strategic and could ideas from different industries and processes. be done better and cheaper by someone else. BPM also implies measurement. Changes should be Amazon.com started as a bookseller but soon became justified in terms of some combination of improved an order fulfillment service for other companies. quality, productivity, and cycle times, and metrics Other firms became business process outsourcing need to be established up front so they can be tracked.8 vendors, handling, for example, human resources Failure to live up to a projection should not be a capital and customer service call centers. offense; rather, it should drive analysis of what was missed. IT jargon and acronyms tend to have a short Thus, BPM is, or can and should be, a way of life, embodying creative, analytical cross-functional think- shelf life; BPM should be “business as usual” ing. That said, it’s important also to say what BPM is for the ages. not (or shouldn’t be):

BPM cannot be an IT initiative — the business has to want it and believe in it. Of course, IT’s active par- WHAT’S LEFT FOR BPM? ticipation is critical, and IT people are well positioned If enterprises have taken full advantage of these develop- to provide BPM housekeeping support to the team, ments, what remains for BPM to do? Have we reached but it’s not their program.

another period of relative equilibrium in process design BPM is not confined to radical change as was busi- as we did for a couple of decades with batch processing? ness process reengineering. Home runs are great, but Is BPM an idea whose time has come ... and gone? many games are won with singles and doubles.

Not at all. The one thing we can be sure of about IT is BPM should not be tied too closely to any particular that the pace of innovation gets ever faster. Just in the technical approach (e.g., SOA). They may be linked past year, Facebook, Twitter, and smartphones have conceptually and synergistically, but either can exist moved from being toys for geeks and youngsters to independently of the other. IT jargon and acronyms serious tools for business and government, while the tend to have a short shelf life; BPM should be “busi- use of wikis and blogs is maturing. Only the daring ness as usual” for the ages. would try to get very specific in predicting their impact.6 BPM is not a specific product or even a technology. Googling “business process management” yields a Also, the “management” part of BPM says it’s an ongo- preponderance of links to tools and software and ing activity, not an episodic one, as reengineering is. So white papers produced by their vendors. But while even if a BPM program goes awhile without unearthing software for workflow management and collabora- opportunities for radical change, just having to think tion is often relevant, its use is not an objective per se. routinely about continuously improving processes — an all-too-easily postponed activity — adds important BPM is not a specific methodology or technique value. BPM should drive regular collegial conversations or software tool for analysis, modeling, and docu- between business and IT about how well a process mentation. These may have a role, but it’s strictly is performing and what, if anything, IT could do to support. They are servants, not masters, and pro- improve it. While this sounds pretty basic, these conver- tracted quasi-religious arguments about their merits sations have not been as typical in the past as we might are a distraction from the real BPM mission. have expected. To call it the “missing link” between business and IT may be a bit much, but it is (or can be) MAKING BPM WORK an important way to maximize IT’s contribution, ensur- ing that IT plays a collaborative role in problem solving Scope rather than simply being told what to do. No law says that BPM needs to be launched everywhere Since BPM is oriented to processes rather than func- in the enterprise at once (or ever). In fact, it would be tions, it also brings together businesspeople who better in most cases to phase it in, thus avoiding the don’t regularly work together.7 This interdisciplinary risky big-bang introduction that often leads to cynicism approach can involve not just process participants and about “flavor of the month” management. There’s so associated IT people, but others who can represent the much to learn — laying out the boundaries of processes,

8 CUTTER IT JOURNAL February 2010 ©2010 Cutter Information LLC getting different functions to work together, finding the processes in which a particular IT manager or analyst right level of detail, and identifying the best people to has the knowledge, business acumen, relationships, really make it work (usually those with no time for a and credibility to be the right choice. new assignment!) — plus, there’s no standard textbook. 3. A business architect. Some organizations have estab- Picking the best process or processes in which to initiate lished a business architect position. If so, this is a nat- a BPM program requires a balance of importance and ural fit as long as, first, such a position is not too alien risk. A process in trouble offers the most room for visible to the culture and, second, it has existed under cur- impact, but its very visibility could make it a problem- rent management long enough to have achieved a atic choice in a risk-averse culture. A process that’s gen- level of credibility among businesspeople. To estab- erally seen to be humming along well is probably a lish the position, especially with a relative newcomer worse choice, since BPM might have to struggle to find (presumably an expert), and simultaneously launch something to change that’s not ho-hum. Another bad a broad BPM initiative for that person to lead would early choice is a process with skeptical managers who virtually guarantee failure; the political challenges don’t want the help and aren’t seen by their superiors or would be overwhelming. peers to be in need of it. The sweet spot, then, lies in a The role of the business architect can vary. She could process that is generally understood to need help but not be purely a leader, setting the tone and dropping in to the point of endangering the business absent immedi- on BPM activities to offer encouragement and advice ate and dramatic fixes. That can come later with good but not trying to run things. Alternatively, there experience, which in turn leads to more credibility. could be a small staff with people assigned to process teams as facilitators or even leaders. The practicality Leadership of these options depends on having the right people. BPM leadership is needed at both the enterprise and The above suggests that there is no textbook answer process levels. At least in theory, BPM leadership can on the question of BPM leadership, but that is reality. be found in one of three roles: Textbooks cannot be expected to capture either the idio- 1. A businessperson. In general, businesspeople are syncrasies of the culture or the particular strengths and the right choice at both levels, but the selection of a weaknesses of the people available. Fortunately, there is specific individual needs to account for that person’s no need to do everything the same for every process. particular orientations and strengths. An ideal can- Whoever leads the BPM program, communication is didate has demonstrated the ability to keep trains critical. Stakeholders need to be kept informed and their running on time, thus having credibility among his input sought on a regular basis, and this has to be more peers, but has also shown inquisitiveness, indepen- than a flank-covering ritual. Specific ideas for change dent thinking, and a record of innovation as opposed and their anticipated value need to be described in busi- to an everything-by-the-book approach. At the ness language and in as concrete a fashion as possible process level, since a process typically involves to ensure understanding and agreement. multiple functions, the best choice for BPM leader is someone from the function closest to the process’s The BPM Team customer, other things being equal. (For example, in a problem resolution process, the customer reports By its nature, BPM is a team effort. The component the problem, and the closest functions to the cus- functions of the process must be represented, obviously, tomer are intake and status inquiry — they catch the but in another dimension, the team requires the follow- heat! Giving those functions leadership helps ensure, ing specific roles: for example, that a cost-saving but inappropriate A provocateur who asks the “dumb” questions that change like a complex voice response menu doesn’t inspire basic rethinking and drive conceptual break- get rammed into a process that serves high-end cus- throughs. This is often a consultant or at least some- tomers.) Unless a process is a candidate for radical one who has no investment in current approaches but change, this would be a part-time activity. is knowledgeable about possibly related situations 2. An IT person. In general, IT people are the worst and technologies. choice, not for substantive but for political reasons. People familiar with relevant state-of-commercial- BPM must not be seen as an IT program for the practice IT, which may include Enterprise 2.0 simple reason that it isn’t. That said, there may be technologies.

Get The Cutter Edge free: www.cutter.com Vol. 23, No. 2 CUTTER IT JOURNAL 9 First-line managers who understand the challenges A facilitator who can keep the sessions positive and of getting the work out and who are oriented toward on track. He needs to be a bit of a chameleon, helping doing things better (i.e., more than just caretakers). the provocateur if the conversation gets too defensive about the status quo and helping the conservative An analytical type who understands not just the contingent if the radicals get too far out. existing process but why it is as it is. This individual keeps the team from overlooking important points. An executive sponsor to give the charge and set the tone. An IT person deeply conversant in current systems and their points of flexibility. The first two roles and the last one are vital if radical change is likely to be required. One person may play A business architect, if the function exists, with more than one role among the related triad of provoca- expertise in process design. teur, customer surrogate, and business architect — it A customer of the process or someone who can act depends on the individual’s expertise and orientation. as a surrogate for external customers to represent Also, the provocateur role may be a cultural misfit in how they would like to do business. some organizations, which is why it’s a natural for consultants (see “Milco Insurance” sidebar). An analyst skilled at capturing design ideas graphically so they can be communicated and BPM Success Factors easily understood. Just because BPM is a good idea doesn’t mean it will work everywhere. Some factors bode well for success:

Process-oriented thinking has already taken root. MILCO INSURANCE There’s a strong orientation toward optimizing the Milco, a health insurer, was swamped in an ever-growing customer’s experience dealing with the enterprise.

backlog of claims, and nothing it tried had made a There is some comfort with process measures, such difference. Its turnaround time was twice its nearest as productivity ratios, time cycles, and quality indica- competitor’s — and growing fast. Even though it had tors that drive the bottom line, even if the arithmetic a lot of data online, there was still much paper, and its linkage cannot be precisely defined. physical movement set the pace for the process. Milco There is a degree of introspection and curiosity about knew it needed a new system and wanted to make sure how and why processes and activities became the that system really addressed its problems. way they are. As a consultant, I was charged with running a kickoff Most people subscribe to the idea that everything workshop to a reengineering effort. To that end, I could always be done better. assembled, among others, the president, the claims VP, a very sharp (and fearless in speaking truth to power) first- The idea of change per se does not evoke reflexive line supervisor I’d met in another project there, IT people hostility. familiar with their systems, and another IT person familiar There has been successful experience working in with imaging and workflow technology. They knew I wasn’t cross-functional and interdisciplinary teams. an expert in their business, so I played the provocateur, saying I didn’t understand why they wouldn’t just pay claims Besides the lack of these positive factors, other factors the day they were received. This statement was greeted with should give one pause before launching BPM: incredulity, but I pressed on, addressing the easy objections Strict top-down management style — cash flow, incomplete information, their competitors Culture of fear didn’t do it — and then split them into two teams to design a same-day workflow. Both succeeded (using imaging and Long-established functional silos, especially with workflow technology) with invaluable help from the line mutual distrust supervisor, who could answer detail questions on the spot. Propensity to jump prematurely into overly detailed analyses

10 CUTTER IT JOURNAL February 2010 ©2010 Cutter Information LLC Smugness (i.e., no internalized belief that processes If the spirit of BPM could be encapsulated in one word, need to improve) it would be pragmatism. There are no universally applic- able textbook answers for who should do what where, To be totally clear about this, there’s a hierarchy of or how to do it, and it calls for a bit of art as well as needs. Software, tools, and techniques are worthless science. What’s good is what works. without good ideas; good ideas will not emerge without the right people; and good people need a culture recep- tive to good ideas. ENDNOTES 1Nolan, Norton & Co., where I worked at the time, was a AVOIDING THE DUSTBIN OF HISTORY leader in this area, and client work I did there both fed into the research and used its results. Will BPM fulfill its promise and become a way of life 2Hammer, Michael. “Don’t Automate, Obliterate.” for enterprises that keeps them firing on all cylinders? Harvard Business Review, July-August 1990, pp. 104-112. Or will it join the glut of three-letter acronyms in the 3 dustbin of business and IT fads? The choice is ours. Hammer, Michael, and James A. Champy. Reengineering the Corporation: A Manifesto for Business Revolution. There are, alas, many easy ways to create a disappointing HarperCollins, 1993. BPM program. Some actions and behaviors to avoid are: 4In my consulting work, I addressed this by gaining agreement on such hallmarks as minimal handoffs, focused responsibility, Tying BPM too closely to any particular technical and matching controls to risks. Most important, I encouraged approach, methodology, technique, or tool people to imagine how they could do their jobs if all the infor- Letting theoretical perfection get in the way of mation they needed were immediately available and guaran- practical improvement teed reliable. 5Of course, having just one of these applications was no Accepting “because we’ve always done it that way” guarantee that it would be used appropriately and effectively. as a valid argument — ever Also, failure to ensure data integrity in an application that so Getting overly wrapped up in describing the current depended on it was a sure road to failure. process 6Andrew McAfee of MIT elaborates on this point very well in his article “Enterprise 2.0 Is Vital for Business,” Financial Times, Going off on tangents, losing sight of the goal 10 December 2009. For IT people, appearing arrogant or patronizing 7In one client company, the procurement folks regaled my colleagues and me with tales about the idiots in materials For businesspeople, appearing inflexible and dismissive management. Naturally, the materials management people returned the favor. Some things a BPM team must do to succeed are generic 8At another client company, the easily measurable financial to teamwork but can never be repeated enough: benefits of a new materials management system seemed scanty, and the head of materials management was getting some heat. Make sure it’s an interdisciplinary effort. Fortunately, he kept many statistics, and they showed a dra- Keep the approach simple, but not simple-minded. matic reduction in shortages on the assembly floor without a concomitant increase in inventories. While the bottom-line Remember that nobody has all the answers. value was impossible to measure explicitly, it was clear to all. More specific to BPM, we can add: Paul Clermont has been a consultant in IT strategy, economics, gov- Stay focused on improving the business. Whether ernance, and management (with a few detours into business process technology plays a big or small role — or no role at reengineering) for 30 years. Before going into individual practice, he all — is secondary. It’s not about technology, it’s was a Principal with Nolan, Norton & Co., a boutique consultancy about the business. that became part of KPMG. His clients have been primarily in the financial and manufacturing industries, as well as the US government. Pay attention to human and political factors. Mr. Clermont has spoken and written and taught executive MBA courses on the challenges of getting significant and predictable value Assign responsibilities based on the strengths and from IT investments. His undergraduate and graduate education at credibility of actual available people, not according MIT’s Sloan School was heavily oriented toward operations research. to some idealized model. Mr. Clermont can be reached at [email protected].

Communicate clearly in business terms, minimizing technical jargon.

Get The Cutter Edge free: www.cutter.com Vol. 23, No. 2 CUTTER IT JOURNAL 11 BETTER BAs = BETTER BPM The Business Analyst Skill Gap by Kevin Brennan

Business process management (BPM) is a business It includes defining organizational goals and how discipline that’s focused on identifying and optimiz- those goals connect to specific objectives, determining ing processes to make organizations more effective the courses of action that an organization has to under- and competitive. It typically depends on IT support take to achieve those goals and objectives, and defining (through dedicated BPM systems and/or SOA). BPM how the various organizational units and stakeholders methods generally focus on incremental and iterative within and outside of that organization interact. A busi- improvement of processes, instead of the wholesale ness analyst1 must possess the following key skills (see redesign advocated by previous methods such as Figure 12): business process reengineering (BPR). Business analysis planning/monitoring involves To be effective, BPM requires systems to enable the determining which activities are necessary in order to rapid modification and deployment of improved busi- complete a business analysis effort. It covers identifi- ness processes, which itself requires the participation cation of stakeholders, selection of business analysis of analysts who can model those process, identify techniques, the process that will be used to manage opportunities for improvement, and design a revised requirements, and how to assess the progress of the process that takes advantage of those opportunities. work.3 Process initiatives need to be planned — BPM initiatives will therefore fail unless an organiza- analysis has to occur in a way that doesn’t disrupt tion has a group of skilled and effective business ana- the ongoing operations of the organization and must lysts (BAs) to support them, but many organizations engage the key stakeholders who will have the ability do a very poor job of recruiting and developing BAs. to affect the success or failure of the initiative.

Some readers may view BPM in a less broad light, Elicitation involves working with stakeholders to focusing more on the modeling aspects of the discipline identify and understand their needs and concerns to support automation of a manual process or chore- and understand the environment in which they ographing of workflows (in other words, business work. The purpose of elicitation is to make sure that process modeling), rather than process improvement. a stakeholder’s actual underlying needs are under- In that case, much of what I’ve written here may still stood, rather than their stated or superficial desires. apply, but the investment in analysis skills may not Effective elicitation skills are required to ensure that need to be as great. the BA understands the goals of all the different stakeholder groups that are affected by a proposed process change. Elicitation work is necessary before THE ROLE OF THE BUSINESS ANALYST (or as part of) any process mapping or modeling One of the first steps required to improve an organiza- exercise as well.

tion’s business analysis capability is to bring some clar- Requirements management/communication ity to the role. Business analysis is the set of tasks and involves managing conflicts, issues, and changes techniques used to work as a liaison among stakehold- in order to ensure that stakeholders and the project ers in order to understand the structure, policies, and team remain in agreement on the solution scope; operations of an organization and to recommend solu- communicating requirements to stakeholders; and tions that enable the organization to achieve its goals. making sure that the knowledge gained by the BA Business analysis involves understanding how organi- is retained by the organization for future reuse as zations function to accomplish their purposes and needed. In BPM efforts, this area becomes especially defining the capabilities an organization requires to critical. Although BAs are not typically experts in provide products and services to external stakeholders. organizational change management, their understanding of how a process has changed means that

12 CUTTER IT JOURNAL February 2010 ©2010 IIBA they have a role to play in seeing that everyone the highest-value changes are dealt with first. He or within the organization understands it as well. she must develop (or evaluate) the process architecture and address the relationship between the process Enterprise analysis involves identifying business models and related models covering rules, events, needs, refining and clarifying the definition of those and data. Finally, models must be developed, vali- needs, and defining a solution scope that the business dated against the business need, and verified. can feasibly implement. It includes problem definition and analysis, business case development, feasi- Solution assessment/validation involves assessing bility studies, and the definition of solution scope a proposed solution (the to-be process) to determine (including the business architecture of the solution). which solution best fits the business need, identify After all, you can’t “improve” a process without gaps and shortcomings in the solution, and determine knowing what you mean by improvement. For exam- necessary workarounds or changes to the solution. ple, are you reducing costs, eliminating errors, or It also describes how BAs assess deployed solutions reducing the time required to deliver a product to (the as-is process) to see how well they align with a customer? How do you decide what tradeoffs to business goals so that the sponsoring organization make between those factors when required? Those can gauge the performance and effectiveness of the decisions are vital when aligning processes to solution. The most critical skill here for BPM is proba- organizational strategy. bly the ability to evaluate how well current processes are performing. The BA must be able to define perfor- Requirements analysis involves prioritizing and mance criteria for the process as a whole and under- progressively elaborating requirements (including stand how to measure the process against those process models) in order to enable the project team to criteria. This will enable BAs to identify potential implement a solution that will meet the needs of the defects or shortcomings in the process and begin sponsoring organization and stakeholders. It includes to identify and/or recommend solutions. Another analyzing stakeholder needs to define solutions that key skill is the ability to allocate work effectively meet those needs, assessing the current state of the between manual and automated tasks. This will business to identify and recommend improvements, require an in-depth understanding of both the work and verifying and validating the resulting require- to be performed and the strengths and weaknesses ments. In a BPM context, requirements analysis will of various BPM systems (BPMSs). focus on the mapping and modeling of processes. The BA must prioritize proposed changes to ensure that

Business Analysis Planning and Monitoring

Solution Enterprise Assessment Analysis Requirements and Validation Management Elicitation and Communication Requirements Analysis

Underlying Competencies

IIBA Figure 1 — Business analysis knowledge and competency areas. (Source: BABOK® Guide.)

Get The Cutter Edge free: www.cutter.com Vol. 23, No. 2 CUTTER IT JOURNAL 13 Many of the abilities described above are vital to the requirements rather than understanding business effective use of BPM in an organization. However, BAs processes. A common promise from BPM vendors is have frequently lacked the training and expertise neces- that their tools will allow end users to directly interact sary to fully support the demands of the role, instead with and modify the process, making this appear to be a focusing on elicitation and documentation of stake- reasonable approach. Unfortunately, most of these tools holder requirements and management of changes to are designed to produce executable process models, those requirements. Through the application process something that takes a great deal of modeling expertise for its Certified Business Analysis Professional (CBAP®) to do effectively (especially when it becomes necessary program, my organization, the International Institute to model exception flows). The ability to effectively of Business Analysis (IIBA®), has seen that even senior define requirements (including process models) BAs in most organizations lack practical experience demands a specialized skill set that, like any other, with enterprise analysis and solution assessment/ requires years of experience to master. validation, meaning that they do not have experience IIBA’s 2008 survey on business analysis techniques with evaluating the objectives behind a proposed assessed the existing state of business analysis practice change or determining whether a change has produced in order to inform the content of the (then upcoming) the intended results. BABOK® Guide 2.0.4 The responses we received are not promising from a BPM perspective. Of the 1,146 Without actual analysis of the process, it’s respondents, 707 stated that they had BPM experience (including Lean and Six Sigma in that total). The only very easy to identify “improvements” that techniques relevant to BPM used regularly by a majority are beneficial at a local level but detrimental of respondents — and remember, these are respondents to the process as a whole. who describe themselves as having BPM experience — are ANSI flowcharts and diagramming tools, such as Visio. When we include occasional or infrequent use of Without an effective business analysis capability, BPM tools, the picture improves somewhat, demonstrat- organizations are likely to suffer high costs from ing that BAs are familiar with those tools even if they rework of initiatives (due to poorly chosen changes) do not use them on a regular basis. or delays in effective implementation of changes (result- In order to ensure that these numbers reflect the “state ing from confusion or uncertainty among stakeholders of BPM,” only respondents who identified themselves as problems are identified late in implementation). as having experience with BPM, Six Sigma, or Lean Without actual analysis of the process, it’s very easy to efforts have been included when calculating these identify “improvements” that are beneficial at a local percentages. The results are presented in Figure 2. level but detrimental to the process as a whole. Local optimizations often shift work onto other functional areas or even onto the customer. SKILLS ASSESSMENT A fourth problem — and one that is frequently over- So how can you help your organization to get better looked — is the opportunity cost organizations incur at business analysis? The first step is to have an under- by focusing on lower-value items. This problem is espe- standing of where you are today. There are a number cially acute in process improvement efforts. Even if the of different approaches organizations can take to enable change is beneficial in and of itself, is it the best change themselves to effectively evaluate the skills of their the organization could be making? Would the people BAs. Most often, we see organizations try to develop a involved in implementing that change be better utilized metrics-based program to monitor the effectiveness of elsewhere? their BAs. However, these programs often struggle to be helpful to organizational performance. UNDERLYING CAUSES There are two problems that derail most metrics-based efforts. First, the majority of organizations are simply Unfortunately, the BA’s typical career path does not not mature enough to effectively collect and assess use- prepare him or her to play an effective role on BPM ful metrics on business analysis work. In CMMI® terms, projects. Companies commonly recruit their BAs most analysis skills are not institutionalized until the directly from business units to act as subject matter organization reaches Maturity Level 3, and effective experts on a given change initiative, or they use IT metrics for those processes only begin to be collected at analysts who are experienced with defining software

14 CUTTER IT JOURNAL February 2010 ©2010 IIBA 0% 20% 40% 60% 80% 100% Flowchart Visual Diagramming Software Dataflow Diagram Activity Diagram Decision Analysis Impact Analysis Benchmarking Root-Cause Analysis Key Performance Indicators Quality Checklists SWOT Analysis Cost-Benefit Analysis Functional Decomposition Metrics Definition SMART Objectives Five Whys Fishbone/Ishikawa Diagram Balanced Scorecard BPMN State-Transition Diagram Total Quality Management Pareto Diagrams Process Simulation Tools Activity-Based Costing Systems Thinking Voice of the Customer (VOC) Value Chain Analysis Control Charts Goal Analysis Cycle-Time Analysis DMAIC Theory of Constraints Value Stream Mapping SIPOC Statistical Process Control Quality Function Deployment IDEF0 Real Options Problem Frames Kanban

Regular Use Occasional Use

IIBA

Figure 2 — Results from survey on business analysis techniques. (Source: IIBA.)

Get The Cutter Edge free: www.cutter.com Vol. 23, No. 2 CUTTER IT JOURNAL 15 Level 4. Organizations operating at Level 2 will have work than the people on whose behalf the requirements defined processes for the management of business have been written. analysis work products, but no defined process for actu- With that said, though, the core of the assessment ally creating those products. That means that each BA should remain the same. The key is to look at the busi- and each project will have a unique process, and thus ness value delivered through the BA’s work. Questions effective comparisons are difficult or impossible. to ask of stakeholders regarding business analysis work products, particularly process models, include:

BAs must, as part of the role, learn to juggle Do the revised processes deliver business value? Are they aligned with organizational goals? and reconcile the conflicting needs of a large number of distinct stakeholder groups. Are the models persuasive? Do stakeholders see how the new version of the process will improve the work done in the organization?

Are the models understandable? Can staff review the The second problem is that business analysis work prod- processes and evaluate the changes they describe? ucts are rarely an end in themselves. Analysis is performed to enable a course of action. Recommendations Can the models effectively support staff training on for process improvement don’t create value for the the revised process? Can people identify how the organization until they are implemented and used process has changed and understand how their roles effectively. Metrics based on assessment of these process are affected?

requirements are therefore a proxy for the actual busi- Do revised processes meet compliance requirements? ness goal, and in general linking compensation or performance assessment to proxy measures risks people Asking these questions, among others, will help to optimizing those measures at the expense of the real ensure that a 360° assessment is based on the actual goal. For example, it’s common for project teams in business value the BA has delivered. development efforts to get into lengthy debates over whether an identified issue is a defect in delivery (and IMPROVEMENT thus needs to be fixed within the existing project scope) or a defect in requirements (which justifies a change to Once you’ve identified the gaps in your current staff the scope of the project). These conflicts will be exacer- skill set, you have to consider the most effective bated if the outcome is used to judge the job perfor- approach for getting your staff to where they need mance of participants in the discussion. to be. There are three major approaches you can take to improving your BA capabilities, implementing them Based on interviews with representatives of organiza- individually or as a combined approach: tions that have successfully launched significant efforts to improve their business analysis performance, a com- 1. Revise HR practices. bination of 360° feedback (assessing BA skills through 2. Train current staff. reviews by managers, peers, and subordinates) and concrete identification of key competencies — and 3. Create a business analysis center of competency. behaviors that demonstrate the analyst possesses those Revising your HR practices where BAs are concerned competencies — seems to produce the best results. typically requires changes to hiring practices. For senior The reason 360° feedback appears to work when evalu- personnel, the focus should be on hiring staff with prac- ating BAs is that it actually aligns well with the nature tical experience in process improvement rather than of the job. BAs must, as part of the role, learn to juggle domain knowledge. While the latter is frequently help- and reconcile the conflicting needs of a large number ful, the best source of domain knowledge is and will of distinct stakeholder groups. This means that a 360° always be the staff who execute your business processes approach will require the assessment questionnaire on a daily basis. Your BAs should have the skills to to be adapted to the perspective of each stakeholder learn what those staff do and help them question if that group. In particular, the groups responsible for imple- is in fact the best way to do it given the goals and objec- menting a change program may well have a radically tives of the organization. In addition, they should have different perspective on the quality of the analyst’s the formal modeling and change management skills that your end users are likely to lack.

16 CUTTER IT JOURNAL February 2010 ©2010 IIBA As for your existing staff, if you have identified gaps search (in February 2010) on both LinkedIn and Indeed.com in their skills, you may need to seek out training to indicated that there are 20-25 business analysts for every busi- help them learn the skills required to move from ness architect, and a review of posted business architect jobs simple elicitation and documentation of requirements further suggested that at least half of “business architect” positions are project or operationally oriented, with the title used to to genuine analysis and identification of improvement differentiate senior staff rather than reflecting a real difference opportunities. in the responsibilities of the position. With all of that said, I The creation of a business analysis center of competency would agree that most “true” business architects probably (BACoC) may be a helpful step for organizations that do have the skills required to be effective at supporting BPM efforts, but given that most companies only have a few people have the resources to support one. The BACoC should in this role, it doesn’t alter the general conclusions of this article. define common procedures and processes that your BAs 2 ® ® should follow, the tools they should use, checklists to A Guide to the Business Analysis Body of Knowledge (BABOK help assess deliverables, and so on. If your organization Guide). 2nd edition. IIBA, 2009. has a BPM CoC, that group may undertake this effort. 3While this may require some familiarity with project manage- However, a dedicated BACoC will help demonstrate ment principles, it is not project management, which involves that your organization is serious about improving the coordinating the work of all team members to deliver a product. Any person on any team should be able to figure out work done by your BAs and that they are recognized how to plan his or her own tasks without a project manager’s as critical supporters of organizational success. assistance. To sum up, effective BPM will require BAs to receive 4IIBA. See 2. training in process modeling and analysis, to take on greater decision-making authority (or serve as trusted Kevin Brennan, CBAP, OCEB, PMP, is VP, Professional Development advisors to those with that authority), and to take at the International Institute of Business Analysis (IIBA®). He is responsibility for understanding and delivering value responsible for IIBA standards and publications (including A Guide to the Business Analysis Body of Knowledge® (BABOK® Guide), to the business. These changes will require businesses to the Endorsed Education Provider program, IIBA’s online social net- move away from recruiting BAs primarily from a pool working communities, and helping to deliver educational opportunities of subject matter experts and expecting them to con- to the business analysis community. Mr. Brennan has more than a tinue in that role. BAs must now develop the skills decade of experience as a business analyst and project manager across needed to translate an organization’s strategy into several industry sectors, including regulated professions, utilities, a series of change initiatives and to implement automobile manufacturing, courier services, and mortgage banking. those process changes to deliver consistent value to During this time he has performed just about every task a business stakeholders. analyst could be expected to do — from developing corporate and product strategies to being paged by end users looking for technical support — and has acted as the lead business analyst on a project to develop a ENDNOTES BPM application suite. 1Business architects are included in the general scope of the BA Mr. Brennan has taught project management and requirements role. They differ from the typical business analyst in that they analysis at Humber College and has a BA degree in history and work at a departmental or enterprise-wide level and usually political science from the University of Toronto. He is also a deal with issues of far greater complexity and risk to the orga- graduate of Second City’s improv comedy program. Mr. Brennan nization. However, at the time of writing, most organizations can be reached at [email protected]. employ a relatively small number of business architects. A

Get The Cutter Edge free: www.cutter.com Vol. 23, No. 2 CUTTER IT JOURNAL 17 HAT TRICK What BPM Hat Are You Wearing? Perspectives on Business Process Management by Ian Gotts

BPM? of the stakeholders will quickly reveal that their inter- A quick search for BPM on Google yielded 15,900,000 pretations of what should be in a process model and hits. There is a huge range of definitions or perspectives how they’d use it are quite divergent. on what those three letters mean: business process man- The risk is that when these individuals discuss proc- agement, business process modeling (with 1 or 2 “L’s”), esses and process models, they naturally assume that business process mapping, and so on. These different the others in the conversation have exactly the same interpretations of BPM are not wrong — they are just understanding as they do. Everyone leaves the meeting different. This could account for some miscommuni- thinking that they are in complete agreement, but then cation and ambiguity between people who genuinely are horribly confused when they act differently. mean the same thing. But there are also very different I’m reminded of the HSBC “different points of view” interpretations based on the need or use of the “proc- advertising one sees at airports (see Figure 1): ess model” — which, incidentally, is another term that means just as many things to different people. The more you look at the world, the more you realize that people look at things from a different perspective. What these adverts often show is that people may think DIFFERENT STROKES FOR DIFFERENT FOLKS they have irreconcilable differences, when in fact they Processes are clearly critical to the running of an oper- are just looking at the same thing from a different per- ation, so it is important that end users, IT developers, spective. And they are actually closer to consensus than systems integrators, and risk and compliance managers they realize. have a consistent, aligned view of how the business The confused and confusing conversations centered on operates. To achieve that alignment, it would be ideal “process” occur frequently at organizations large and if these stakeholders could collaborate over a single small, with process efficiency, process governance, and source of the truth as regards process. The way to process adoption all suffering as a result. It’s vital, achieve that would presumably be to have one inte- therefore, to take the time to understand the root cause grated process model that includes all of their require- of the confusion and help people grasp the needs and ments. Is this possible? A short conversation with each perspectives of the other stakeholder groups.

Figure 1 — Each group of stakeholders sees “process” from its own point of view.

18 CUTTER IT JOURNAL February 2010 ©2010 Cutter Information LLC WHAT COLOR IS YOUR HAT? PROCESS IS IMPORTANT, BUT CONTEXT IS MORE IMPORTANT Intrigued by this ambiguity, I questioned a number of people at different companies about process, and it It is generally accepted that not every activity in a com- became clear that there were four main audiences who pany can be automated. Manual activities are open to need to share an organization’s business process model. the free will and inconsistencies of the individuals per- To make this simpler to articulate, I decided to give forming them. What may be surprising is the relative each audience group a different colored hat — Green, percentage of automated vs. manual processes. SAP’s White, Blue, and Red. Here’s how it goes: own research suggests an 80/20 split — with the 80% the manual processes. This figure is consistent with End users (or business users) want to use the process Microsoft’s findings. Other organizations consistently model for staff training and point-of-need support agree that these proportions are roughly correct for when they are unsure how to conduct a task. The their enterprises as well. process model needs to include (or link to) detailed work instructions, forms, templates, systems, and per- Those in IT realize that processes are critical to support- formance metrics. In this respect, the process model acts ing the operation. However, process documentation cre- as a powerful knowledge management resource. The ated from an IT perspective is generally too complicated process model is the starting point for all manner of and unpopular with end users. What end users want business performance improvement initiatives. This is is to have “guided walkthroughs” with the relevant the Green hat perspective. screens, documents, or work instructions fed to them in the right sequence and context. Such an approach Now, that hat may be on “sideways,” as the average age enables them to deviate from the process when of employees in service-based organizations is under 30 required. The guided walkthrough is represented in — the Gen Y or iPod generation. These are the frontline Figure 2 by the “wiggly” line, which shows the end-to- staff who interact with the customers day in and day end flow through both manual and automated activi- out. It may be important to bear this in mind before ties. For an end user, a process flows between manual deciding what kind of process content to inflict on this and automated activities. Automation (provided by audience. ERP transactions and other systems) is most easily The IT department wants to understand the business understood when explained in the context of the full users’ view of the operation to ensure that the IT sys- end-to-end business process. tems they build and maintain truly support the business Why is the line broken? Because most process-mapping users, at minimum cost. They want to ensure that there exercises are IT oriented, the automated activities get is integrity of information as it flows around the sys- detailed process descriptions, while the descriptions tems. They need to prove their worth to the business, of the manual activities are sketchy and incomplete. particularly now that outsourcing is the dark threat Worse, the process content is not normally published in hanging over all IT departments. This is the White hat such a way that end users can easily find process and perspective. related information relevant to their role. As a result, IT system vendors (e.g., SAP, Oracle, Salesforce.com) end users often don’t find or don’t understand process and the project teams who implement such systems information that can help them in their job. want to ensure that the configuration of their system is managed accurately and that it hangs together end to end (i.e., it passes system testing and user acceptance testing). In short, they want to make sure that it meets Manual Activities the users’ needs. That will ensure that acceptance documents are signed, invoices are paid, and the software maintenance annuity revenue is protected. This is the Blue hat perspective. Risk and compliance officers want to be able to demonstrate to auditors that end users are following a docu- Automated Activities mented process and that the correct risk control points have been identified and are effectively managed from a governance, ownership, and auditing standpoint. This is Figure 2 — A guided walkthrough shows the end-to-end flow of the Red hat perspective. a process through both manual and automated activities.

Get The Cutter Edge free: www.cutter.com Vol. 23, No. 2 CUTTER IT JOURNAL 19 In any case, most end users have in the past found the officers) are going to collaborate, there’s a need to avoid process content hard to understand, so now they do diagrammatic mayhem. By which I mean that, for a not even bother to look for it. Consequently, the most particular process, recording every requirement of all common cause of process breakdown is human, though four audiences in a single diagram could result in infor- people are usually very willing to lay the blame for mation overload. This approach would ultimately com- poor performance on the “new IT system.” promise everyone’s ability to understand the diagram, and each of the four audiences would quickly return to working in their respective silos. WHY SHOULD WE WORRY? So how can the four audiences learn to work together Many business users may feel that process models are on a shared understanding of their business processes? only some arcane definition of the business depicted The most likely way to make this succeed is to have a as boxes and lines on a hopelessly complicated diagram. simple diagramming notation that all four audiences This is probably because, at some point, they had can understand, which is perhaps a subset of BPMN. imposed on them a process model designed by and Clearly that has to be the business (Green) view of principally for the IT function. An alternative view is process, as that’s over 90% of the audience and all four that the process knowledge of the organization is the stakeholder groups can understand it. most valuable intellectual asset, which should be captured, nurtured, and governed to maximize corporate How do we integrate the needs of the other three audi- performance. Think of it as the DNA of the organization. ences (IT, systems providers, and risk and compliance) into this simplified view of process? Their requirements can be overlaid on the business view of process by using three techniques: If all four audiences are going to collaborate, 1. Attached information. Links to information (docu- there’s a need to avoid diagrammatic ments, forms, policies, work instructions) can be mayhem. added to objects on a process diagram without complicating the fundamental diagram with arcane shapes and clutter. If you were a retail store manager and admitted to your 2. Cross-reference links. These links can be added area manager that you had no idea what stock you had between objects in the process model and correspond- in the store or how much was damaged or out of date, ing technical systems (such as the ERP system, work- what would your career path look like? Pretty short, for flow system, software configuration environment, and one thing. Treating your business processes as a critical so forth). There can, if necessary, be cross-references asset, as important as your inventory of stock, should between the business view of a process activity and demand that you safeguard, nurture, and use that the technical view of that activity from an automation information. But independent research1 shows that perspective; for example, links to a technical process information workers typically spend more than 20% flow held in a process automation system. of their time looking for accurate information (docu- 3. Personalization/role-based information. By showing ments, systems, work instructions) to be able to execute or hiding the attached information and links accord- a task. This can result in incorrect use of systems, manual ing to each user’s needs via group membership, the workarounds, and use of out-of-date documents or forms diagrams remain simple, uncluttered, and under- — all resulting in waste, frustration, and a risk of compli- standable for the majority (i.e., business) audience, ance failure. Standardization, enforcement, control, and yet full featured for each of the other three audiences. performance monitoring of manual activities present a challenge, because people do not work with the untiring Rather than the diagram appearing more complex, it consistency of a computer. They have free will, which provides contextual access to extra information, and should be harnessed to work at a higher level, not simply each audience can satisfy its requirements without com- to figure out how to do the most basic parts of their job. promise. The Green hat perspective of process acts as the unifying hub, and other process views and systems are connected to that, potentially providing the linkage LEARNING TO SHARE across more than one type of business process applica- If all four audiences (Green: end users, White: IT tion. This approach will reduce the risk of conflict that department, Blue: IT vendors, Red: Risk and compliance seems to surface between business and IT in which

20 CUTTER IT JOURNAL February 2010 ©2010 Cutter Information LLC both parties seem to assume that the process model is The need for a detailed technical specification to a single entity to be fought over. ensure all end user needs were met and that the project could be delivered to ING’s deadline — the It is critical for the core business process model and con- Blue hat perspective nected information systems to be managed in parallel so that they stay synchronized. For example, the Green activity Generate Invoice needs to be related to the White This was an ideal business process improve- activity Generate Invoice, the Blue SAP transaction VF01 – Create Billing Document, and the Red control point ment project — lots of scope for improved Invoice Generated. All groups (Green, White, Blue, and ways of working, many of which would no Red) have a shared responsibility for keeping their doubt involve process automation. elements up to date, with a BPM software application automatically maintaining the cross-linkages. Approach This puts stringent demands on any BPM application that needs to be able to manage potentially multiple A team of several regional Compliance Officers dealt models and cross-linkages. There are some core require- with a wide variety of compliance issues, including a ments that you’ll need to ensure are supported: ease of (manually executed) trade approval process known as modeling, management of relationships, an auditable “Pre-Clearing.” With the implementation of MiFID in governance cycle, multiple views controlled by access November 2007, regulatory changes relating to insider rights, and scalability to serve all of your users — trading had resulted in an increase from 200 to 1,500 potentially every employee and selected third parties. traders who must Pre-Clear proposed trades. Existing ways of working no longer sufficed. There were inconsistencies in how different Compliance Officers worked. CASE STUDY: ING’S COMPLIANCE MATURITY PROGRAM Manual-intensive processes and an overreliance on CONSIDERS ALL HATS e-mail meant that the process was not just inefficient, but impossible to report on from an audit perspective. Context Monitoring was impossible due to the fact that all data ING South West Europe started a Compliance Maturity was stored locally in Compliance Officers’ mailboxes program in January 2008, with the objective of updating or folders. and improving the organization’s compliance function This was an ideal business process improvement project and, where necessary, improving the approach and — lots of scope for improved ways of working, many efficiency of Compliance Management through process of which would no doubt involve process automation. automation. It was apparent that several compliance But new software was out of the question, as ING’s IT processes were very manual and resource-intensive. As Department was already fully occupied on other proj- a consequence, new compliance regulations tended to ects. This therefore had to be a business-led project and result in increased head count in the compliance area. the Compliance Maturity Program Director decided that One area of concern was the huge increase in workload a software-as-a-service approach was the ideal way to resulting from MiFID (Markets in Financial Instruments implement process improvement and automation with- Directive) regulations, and ING urgently needed to out confronting the internal IT constraint. He engaged address this in order to avoid problems with the Belgian Nimbus and their product Nimbus Control to help regulator “CBFA.” address these issues. The project aptly demonstrates the multiple “hats” The first step was an in-depth process definition work- or stakeholder perspectives for a business process shop with several of the Compliance Officers and a facil- management project: itator from Nimbus capturing the required processes The traders who use the system (Green hats) directly into the software application as a series of simple process diagrams. This was then enriched with The compliance team, who both used the system extra details to record precise descriptions of required (as Green hats) and are also Red hats due to their automation, compliance requirements, and other issues. need to demonstrate regulatory compliance This ensured a shared common understanding of the The IT department — White hats who had to sanction process simple enough for the Compliance Officers to the new system understand and sign off, and rich enough for the developers and client sponsor to have confidence that the

Get The Cutter Edge free: www.cutter.com Vol. 23, No. 2 CUTTER IT JOURNAL 21 requirements were accurately understood and could THE FINAL WORD be delivered against the pressing deadline. A technical The next time you think that you are in “violent agree- specification was built from the process content, which ment” about BPM, step back, look up, and see what hat after a couple of reviews with ING was handed to the the other person is wearing. And remember: development team, who started work straight away. There are four audiences with different needs and Results perspectives.

The software development project was extremely fast, Each audience needs to respect and accommodate and due to the initial work done mapping the processes, all four views. was “right first time.” Compliance Officers now access All four audiences need to collaborate and therefore the application through a secure Web-based application. need a common understanding of processes and how The process information captured at the outset remains they are modeled. an integral part of the solution and is accessible along with the application through a personalized portal, That common model may require some compromises which includes process descriptions, performance but has to be understood by all four audiences. metrics, and scorecards, providing a real-time view Therefore, it has to use a language that business — of relevant process performance. Over 99% of trade at least 90% of the audience — will understand.

requests are now dealt with automatically. Governance and cross-linkage capabilities are critical, Feedback from the Program Director verified that by or else the four audiences will diverge. starting out with a clearly defined business process, All of this argues for one multifaceted process model communication was greatly improved between the that links to related systems and information and development team, management, and users. Also it was supports all four audiences but is grounded on a easier to determine the appropriate measures to focus visualization of processes that business users can easily on for the metrics and scorecards. The initial pilot was understand. If that’s correct, it explains why there’s a so popular that additional users started signing up “B” in BPM. before they were formally invited to.

Future ENDNOTE This business-led approach, leveraging BPM software 1“It’s Here Somewhere: The Effects of Storage Methods on Job delivered as a service, has proven very successful for Performance.” HermanMiller Research Summary, 2008 (www. ING. A second process automation project, the “Insider hermanmiller.com/MarketFacingTech/hmc/research_ Registration Process,” has already been completed. The summaries/pdfs/wp_Here_Somewhere.pdf). Pre-Clearing application is being rolled out across the Ian Gotts is Founder, Chairman, and CEO of Nimbus, a rapidly whole South West Europe region. Several other banks growing software company with offices in 10 countries. Nimbus are now taking a similarly business-led approach to delivers process mapping and process improvement software to its addressing their own process, compliance, and risk clients, which include Toyota, Unilever, JPMorgan, Novartis, and management requirements in the face of rapidly chang- the UK government. He is author of four books: Common Approach, ing regulatory compliance requirements. Uncommon Results; Why Killer Products Don’t Sell; and two Thinking of… books on cloud computing, which makes him a sought- after and entertaining conference speaker. Mr. Gotts can be reached at [email protected].

Value Chain Modeling: Linking Customer Value to Business Process Design and Automation by Fred Cummins

INTRODUCTION cross-functional processes. As the business evolves, the It’s been 25 years since Michael Porter introduced automated systems have become more complex and value chain analysis in his book Competitive Advantage: interdependent, which makes them difficult to adapt to Creating and Sustaining Superior Performance.1 The busi- new business models and technological improvements. ness landscape has changed considerably in that time, Technology has also changed relationships with cus- but the basic principles Porter introduced have not tomers and suppliers through high-speed and inter- changed. The goal of value chain analysis is to focus active communications, enabling more extensive on delivery of value to the customer. The value chain outsourcing and creating new customer expectations. provides a business abstraction focused on capabilities Enterprise managers need computer-based models to and their relationships to value delivery. manage this complexity. Such models must support A Porter model typically represents the enterprise as a appropriate abstractions of the business and at the same combination of a half dozen high-level capabilities that time remain aligned with the operation of the business lead to customer value. These are broken into more for effective assessment and leadership. Value chain detailed capabilities in a hierarchy often described as a modeling is one such key abstraction. The Object business process hierarchy. eTOM (enhanced Telecom Management Group (OMG) has recently issued an 3 Operations Map)2 is an example of such a capability RFP for a Value Delivery Metamodel that will define breakdown for telecommunications companies. This a computer-based language for modeling value chains. abstraction does not necessarily align directly with In this article, I will first outline objectives for a value actual business processes nor the management hierar- chain modeling capability. I will then discuss the compo- chy. The focus is on what the enterprise does or should nents of a value chain model, followed by a discussion do to deliver customer value. The business processes of the relationship of the model to operational business and management hierarchy are aspects of how the processes and IT solutions. Finally, I will discuss the capabilities are managed and coordinated to optimize potential business benefits of value chain modeling: customer value. Current techniques such as business Enhanced customer value process management (BPM) and capability mapping do not bridge this gap effectively. Improved governance

Over the years, enterprises have become more complex. Economies of scale Large corporations have formed from multiple mergers Focused process improvement and acquisitions, with varying degrees of consolidation of operations. Corporations and markets have become Agile business adaptation multinational. Multiple corporations form joint ven- Business-IT alignment tures. Enterprises outsource basic business functions and engage networks of suppliers. Lines of business (LOBs) can no longer be operated as independent sub- MODELING OBJECTIVES sidiaries, but must leverage shared capabilities both across the corporation and with business partners. Link Customer Value to Capabilities Automation has added to this complexity by embedding The focus of analysis must be on delivery of customer business processes and dependencies between capabili- value. Delivery of this value may depend on specific ties into large-scale computer applications. Automation capabilities, a combination of capabilities, or the has evolved from improvement of tasks to streamlining way capabilities are integrated and coordinated. For

Get The Cutter Edge free: www.cutter.com Vol. 23, No. 2 CUTTER IT JOURNAL 23 example, timely assessment of an insurance claim may Support Capability Consolidation be a key customer value. In a large enterprise, there will be different value chains for different LOBs. These value chains may engage simi- Establish Dependencies Between Capabilities lar capabilities. The value chain model must support Capabilities do not all contribute directly to customer identification of similar capabilities for possible consoli- value. Some capabilities depend on other capabilities; dation. For example, skills, machines, facilities, work for example, a service technician must be deployed products, and so on can be compared for similarities. before a problem is diagnosed. A model of capabilities and their dependencies provides an abstraction of what Identify Opportunities for Process Improvement capabilities contribute to the end product and a basis Analysis of the value chain model should help identify for considering capability and process improvements the need to improve individual capabilities as well as without wading through all of the complexities of the manner in which business processes engage and business operations. operate the capabilities for delivery of customer value. For example, defects might be reduced through redesign of certain tasks or automation. Simply knowing the capabilities and their contributions is not sufficient for meaningful Optimize Across Multiple Lines of Business analysis. Value chain models for multiple LOBs should support enterprise-level consideration of capability tradeoffs, the impact of capability changes, and investment in new capabilities. For example, consolidation of product dis- Provide Levels of Abstraction tribution may achieve more efficient cargo configuration A complete value chain model may involve many capa- and transportation routing. Changes to capabilities must bilities and dependencies. A diagram depicting all of be considered in the context of the LOBs they serve. them may still be too complex for meaningful discussion and analysis. The value chain model should pro- MODEL COMPONENTS vide relatively high-level abstractions with the ability to selectively expand the detail to understand specific con- A value chain modeling environment must integrate a tributions and dependencies. For example, product fab- number of components. In this section, I will outline rication might be expanded to show the more detailed those components and their relationships. phases of fabrication. The examples I will cite are primarily based on manu- Link Capabilities to Responsible Organizations facturing, although the same basic principles apply to other industries. Charles Stabell and Øystein Fjeldstad Capabilities are managed by organizations. These orga- of the BI Norwegian School of Management describe nizations are responsible for effective operations and three different classes of value chain:4 improvements to their operations. As top managers 1. Chains (e.g., manufacturing organizations, where consider such factors as organizational changes, process products are mass-produced) improvements, and investment in new technology, they need to understand the organizational context in which 2. Shops (e.g., job shops, where individual products these changes must be implemented. For example, a bill are developed to customer requirements) of materials explosion is linked to a specifications man- 3. Networks (e.g., banks, which link savers and agement organization that maintains the explosion detail. borrowers as two classes of customers) Support Analysis of Costs, Time to Deliver, and Quality In any enterprise, there are interdependent capabilities that contribute to the creation of value for a customer. Simply knowing the capabilities and their contributions is not sufficient for meaningful analysis. In particular, Customer Value Factors cost, time to deliver, and quality must all be factors in the analysis, as they have cumulative effects on cus- A customer may value price or timeliness, but there tomer value. For example, each activity in a process may be other factors as well, such as the availability of may capture the cost, delay, and probability of defects distinguishing product features, customer services, or per unit of production. the tailoring of a product to particular customer needs.

24 CUTTER IT JOURNAL February 2010 ©2010 Cutter Information LLC A modeler must characterize each of the factors that to expand into detail as needed. Note, however, that customers value. This should include both those factors these abstractions may not align to the grouping of for which the enterprise currently achieves customer capabilities in the management hierarchy, and some satisfaction and those that need improvement. For each capabilities may be outsourced services or part of an of these, the capability requirements must be identified. external supply chain. This model has similarities to other business view- Core Model points. For example, the dependencies in the value The core value chain model is a dependency network chain correspond to material flows in an MRP (manu- similar to a PERT diagram. Each node in the network facturing resource planning) model or to the paper depicts an activity that uses a capability to contribute flow in an insurance claims processing service. How- to the creation of customer value. Similar to a PERT ever, for value chain analysis, the focus is on the uses diagram for a project plan, a dependency (network arc) of capabilities rather than the detail of the business depicts an activity’s need for input that is produced as operations and work products. another activity’s output. Typically, analysis will start with the end product and work backward. Inventories Figure 1 depicts a hypothetical value chain for a custom Typically, delivery of each product to a customer does kitchen cabinet supplier. The vendor designs, manufac- not start with raw materials, but draws on component tures, and installs cabinets, including granite counter- inventories that are purchased or produced in antici- tops. In the diagram, there are three parallel paths for pation of customer requests. These inventories are an producing customer value: development of the granite important factor with respect to time and cost of deliv- counter top, manufacture of the cabinets, and prepara- ery. Inventories avoid dependency delays, support vol- tion for installation. ume purchasing and transportation, and allow setup costs to be allocated over multiple units of production. The modeling environment should support higher-level On the other hand, inventories add product cost for abstractions of the value chain network so that a group storage and investment in the cost of the inventories. of activities may be represented by a single, more general activity. Typically these abstractions will associate Figure 2 depicts the addition of granite and parts inven- activities with similar capabilities, particularly those tories (represented by triangles) to the value chain of that may require similar resources. This hides some of Figure 1. The time from receipt of a customer order to the complexity to support an overview and the ability installation is shortened because the activities between

Design Acquire Machine Ship Counter Granite Counter Counter

Design Acquire Produce Cabinets Wood Parts Ship Cabinets Install

Customer Order Assemble Acquire Hardware

Prepare Site

Figure 1 — Value chain network.

Get The Cutter Edge free: www.cutter.com Vol. 23, No. 2 CUTTER IT JOURNAL 25 Acquire Granite Granite Inventory

Machine Ship Counter Design Counter Counter Customer Design Assemble Ship Order Cabinets Cabinets Cabinets Install

Acquire Hardware

Parts Prepare Acquire Produce Inventory Site Wood Parts

Figure 2 — Production from inventory.

Customer Order and Install do not include the acquisi- production volumes representing significant product tion of granite, hardware, and wood, nor the machining variations for past or future operating periods in order of parts. to arrive at representative average costs per unit. The cost of a value chain activity must also reflect the alloca- The value chain dependencies also provide a basis for tion of fixed costs and overhead per unit of production, considering the impact of operational delays and fail- so cost per unit will depend on production volumes. ures. Inventories provide flexibility in timing such that failure of an inventory-producing capability does not Throughput time for an activity will be affected by affect customer delivery until the inventory is depleted. product variations as well as production capacity and demand variations. If there is insufficient capacity, Product Variations then an activity may become a bottleneck, delaying production on individual units. If there is an excess A value chain model may represent the delivery of of capacity, then cost per unit will increase. If there multiple products (or services) or a single product are surges in demand, delays may occur during peak (or service) with variations to meet different customer periods. requirements. For example, in the auto industry, a single product line may have multiple models and many Defect and rework data should be captured to provide options. The capabilities required are fundamentally the insights on quality. These may add to time and cost, same for each unit of production, but some capabilities and in some cases may impact the quality of products may not be used on all product variations, and some delivered to the customer. capabilities may involve more time and cost for some product variations. Organization Alignment Responsibility for each activity in the value chain must Cost, Time, and Quality Models be identified by associating the supporting capability A value chain model should support the analysis of with the responsible organization. As noted earlier, the cost, time, and quality for each value chain activity groupings of activities into more abstract activities may and associated product variations. not align to the management hierarchy. The modeler should be able to redefine the groupings and recom- Costs will depend on the extent to which resource use mend organizational changes, considering different is optimized. (Optimization factors are discussed fur- factors that may lead to closer alignment with the ther below.) Cost computations should be performed on

Information Systems Alignment Produce Parts Service Each capability should include references to the automated business processes and applications that support Setup Machine Finish it. This will encourage better alignment of systems to business needs.

Business Process Alignment Business processes will drive the execution of value chain activities. The design of these business processes Acquire Parts will determine the optimization of resource utilization Wood Inventory and the tradeoffs made between cost and response time as well as the potentially competing interests of multi- Figure 3 — Business process alignment to the value chain. ple LOBs. The value chain model will not directly model business processes, but it will define a frame- the control exercised by business processes and the work for business process design and optimization, dependencies of the value chain. as discussed below. There will be a variety of internal business capabilities that support the mainstream value chain capabilities, HOW THE VALUE CHAIN MODEL including accounting, HR management, procurement, RELATES TO ENTERPRISE OPERATION facilities maintenance, and IT development and operations. These are part of the overhead of value chain In this section, I will examine in greater detail the rela- capabilities that must be factored into costs. Each of these tionship of a value chain model to the operation of the may be viewed as an internal value chain serving the enterprise. I will start by considering the relationship of needs of its internal customers. In general, the primary the value chain to business processes and the design of value chain capabilities are those that have a direct information systems. Then I will consider the organiza- impact on the delivery of customer value. In some cases, tional impact and, finally, discuss support for optimiza- a capability may be included or excluded from the value tion from an enterprise perspective. chain based on the modeler’s judgment and the capability’s relevance to analysis of the value chain. Business Process Architecture The value chain may include capabilities that are out- Business processes operate at three levels in support sourced. The internal business processes of those capa- of the value chain: bilities may thus be private to the capability provider, 1. They define when and how capabilities are engaged but the value chain dependencies and the business to produce the customer value for a line of business. process interactions should be well defined. If the capability shown in Figure 3 were outsourced, it could 2. They define how capabilities perform value chain appear as a “black box” but have the same inputs and activities. outputs. 3. They support the management, maintenance, and optimal operation of capabilities. IT Support Figure 3 focuses on the Produce Parts capability (from The IT organization provides support services for the Figure 2) as a shared service. Not surprisingly, the utilization of IT for automation, integration, and collab- Produce Parts service has an internal business process oration. The value chain models provide a framework for producing parts. The service produces batches of for aligning information systems with the business. parts to inventory in order to minimize the setup cost Business processes that implement a line of business per unit. The service is engaged (arrows at the top) by and engage shared capabilities are owned by the LOB business processes that determine production schedules manager. This manager will define requirements for based on forecasts of customer orders. Acquire Wood integration and automation of these processes and and Parts Inventory are the associated value chain activ- their associated tasks within enterprise optimization ities. This diagram highlights the distinction between

Get The Cutter Edge free: www.cutter.com Vol. 23, No. 2 CUTTER IT JOURNAL 27 constraints. Note that some capabilities are unique to Figure 4 illustrates the relationships of LOB manage- an LOB and may be still owned by the LOB manager. ment (rows) and capability management (columns), with capability uses indicated by dark cells. Here the The business processes and tasks that define the oper- hypothetical vendor has two LOBs that share some ation and management of each of the capabilities are capabilities (dark cells). This is essentially an alternative owned by each capability manager and must be appro- view of two value chains. The capabilities are grouped priate to the differing requirements of the multiple into larger departments that focus on management of LOBs served by the capability. Processes within capa- similar resources. Essentially, the LOB managers are the bilities should begin and end within the capability internal customers of the capability managers. organization so as to support loose coupling and enable independent, local improvements. Support Services In Porter’s value chain model, business functions such as procurement, HR, and finance are supporting ser- The focus on management and utilization vices that do not contribute directly to the creation of of capabilities leads to the need for a customer value. These are shared capabilities that were matrix organization. consolidated early in the development of business organizations both for economies of scale and control. IT is a more recently defined shared capability. Such functions may also be modeled with value chains, but their value chains serve the needs of internal customers. They are In most cases, the automation of repeatable business part of the general business capability and cost of deliv- processes should be implemented with a business ering value to the end customer. Value chain analysis process management system (BPMS) that enables may identify other capabilities that can be removed process owners to define, view, analyze, and modify from mainstream operations and provided as support- their business processes with minimal technical sup- ing services, such as the pooling of shipping containers port. However, where capabilities involve minimal for multiple LOBs. human participation or little variability in the process, optimal performance may be achieved with pro- Enterprise Optimization grammed solutions. Other processes that involve ad hoc human planning and decision making may Enterprise optimization should be considered from be addressed by case management systems.5 three key perspectives: 1. Optimization of customer value for each LOB The Matrix Organization 2. Optimization of cost, quality, and timeliness of The focus on management and utilization of capabilities activities performed by each capability leads to the need for a matrix organization. Shared capabilities should be managed independently of the 3. Optimization of agility to respond to changing LOBs they support so that they are not biased to sup- business needs port any particular LOB. On the other hand, each LOB Enterprise optimization requires an enterprise-level should be managed for success, considering market activity to model and support analysis and design of demands and capability requirements. enterprise operations independent of the more specific

Engineering Production Field Support

Parts Cabinets Machining Assembly Shipping Installation Repair

Cabinets LOB

Millwork LOB

Figure 4 — Matrix organization.

28 CUTTER IT JOURNAL February 2010 ©2010 Cutter Information LLC interests of LOB or capability managers. The IT organi- Focused Process Improvement zation should have a unique role in this enterprise opti- Specification of shared capabilities as services and align- mization activity, first in identifying opportunities to ment of business processes to capabilities enable man- exploit IT and then in providing a cross-enterprise per- agers of specific capabilities to optimize their internal spective on the design and integration of supporting processes with little or no impact on the processes that information systems. engage those services or the related business operations. This supports delegation of authority and enables local BUSINESS BENEFITS initiatives to improve operations. Value chain analysis may also facilitate discovery of new business models, Enhanced Customer Value such as the elimination of capabilities through disinter- mediation. Existing and potential customer value can be protected and improved through identification of contributing capabilities and their roles in the context of associated value chains. Customer value and associated capability The impact of new requirements can be more requirements arising from changing market demands quickly assessed in the value chain context. can be more effectively assessed and focused on development or improvement of existing business processes and capabilities. Agile Business Adaptation Improved Governance The clarification of capabilities and the configuration Value chain models will provide an executive viewpoint of value chains as alternative uses of shared services on business processes and capabilities that will support enable more rapid and effective adaptation of the enter- more effective governance. A model provides the link- prise to new business demands and opportunities, age between customer value, the capabilities needed to including new applications of IT. The impact of new produce customer value, the responsible organizations, requirements can be more quickly assessed in the value and the information systems that support them. The chain context. Changes to a capability can be imple- impact of policies and regulations or other external mented just once if the capability is consolidated. If influencers can be more quickly analyzed and enforced capabilities have well-defined scope and interfaces, the by focusing on affected capabilities. Executives are bet- enterprise can enable new business models or support ter able to evaluate performance, exercise control, and new LOBs through easy reconfiguration of the value consider new business opportunities as well as strate- chain rather than development of new organizations gies for improving competitive advantage. and capabilities.

Economies of Scale Business-IT Alignment Similar capabilities can be identified and consolidated A value chain perspective and composition of value for economies of scale, such as more effective workload chains from shared capabilities provide the basis for a balancing or development of specialists. Exposing these flexible technical architecture for integration, business capabilities as shared services improves flexibility process automation, and automation of business oper- and promotes independence from particular LOBs. ations within capabilities. The value chain defines Improvements to shared capabilities can be considered distinct owners for lines of business and capabilities. in the context of multiple value chains to optimize Automation can be better aligned with the operations of changes and investments from an enterprise perspective individual capabilities, avoiding tight coupling between and potentially balance competing interests. Shared capabilities that would restrict local initiatives and capabilities that do not provide unique customer value enterprise agility. may be considered for outsourcing. Outsourcing takes Funding of IT projects can be planned from an enter- advantage of economies of scale and specialization prise perspective while enabling projects to focus on across multiple enterprises and may become necessary the need to improve specific capabilities. The value for the enterprise to remain competitive. chain also facilitates discovery of opportunities to

Get The Cutter Edge free: www.cutter.com Vol. 23, No. 2 CUTTER IT JOURNAL 29 exploit technology in ways that change the market ENDNOTES through new relationships with customers and 1Porter, Michael. Competitive Advantage: Creating and Sustaining business partners. Superior Performance. The Free Press, 1985. 2“eTOM Business Process Framework (eTOM) in Depth.” CONCLUSION TeleManagement Forum (www.tmforum.org/ BestPracticesStandards/BusinessProcessFramework/ While value chain modeling has been around for many 6637/Home.html). years, the lack of a robust, computer-based modeling 3“Value Delivery Metamodel RFP.” Object Management Group language to manage the complexity has limited its busi- (OMG), 26 March 2009 (http://doc.omg.org/bmi/2009-03-09). ness benefits. The use of value chain models to identify 4Stabell, Charles B., and Øystein D. Fjeldstad. “Configuring and manage shared business capabilities across multiple Value for Competitive Advantage: On Chains, Shops, and LOBs is a key aspect of a new business paradigm in Networks.” Strategic Management Journal, Vol. 19, No. 5, 1998, which: pp. 413-417.

5 The value chain provides a framework for the “Case Management Process Modeling RFP.” OMG, design of business processes. 22 September 2009 (www.omg.org/cgi-bin/doc?bmi/09-09-23). 6For more on this emerging business paradigm, see Cummins, LOBs are designed as value chains that engage Fred, Building the Agile Enterprise with SOA, BPM, and MBM, shared services. Elsevier, 2009.

Performance improvement and investment in Fred Cummins is an HP Fellow involved in industry standards, automation and transformation are optimized at BPM, SOA, and cloud computing. He is Co-Chair of the OMG an enterprise level. Business Modeling and Integration Domain Task Force that is The OMG process for development of a Value Delivery responsible for the Value Delivery Metamodel (VDM), Business Metamodel standard for value chain modeling will Process Model and Notation (BPMN), and Case Management Process Modeling (CMPM) specifications, as well as other business-oriented receive initial proposals in early 2010. Some work on specifications. He is a leader in the development of the OMG VDM the development of implementations will occur concur- specification. Mr. Cummins can be reached at [email protected]. rently with the development of a standard. In the long term, value chain modeling will be a key viewpoint in enterprise architecture models supporting assessment, analysis, planning, design, transformation, and automation of enterprise operations.6

Business process management (BPM) is an effort that change the command-and-control organization to an focuses on the alignment of all facets of an organization information-based organization, which is an organiza- in an attempt to improve its overall efficiency. The end tion of knowledge specialists.5 Information-based orga- result should be a closer alignment of the organization’s nizations require clear, simple, common objectives that abilities with the desires of its customers. BPM is a translate into particular actions. They also concentrate holistic approach that promotes a systematic means of on one objective or at most a few. Because the members improving an organization’s business processes while of an information-based organization are specialists, delivering increased value to its customers. An optimal they cannot be told how to do their work. approach to BPM would be to continuously improve The agile movement is directly in line with Drucker’s those processes as the business climate, customer New Organization. Agile methods attempt to deliver desires, and employee needs/wants change over time. code in short iterations in an effort to gain rapid and A retrospective (as used by agile development teams) is frequent feedback from the customer or stakeholders, an in-progress evaluation of the team’s workings, done thus allowing the development team to easily adapt to in an effort to address its development processes. A a rapidly changing set of requirements. These methods retrospective typically looks at what is working, what tend to produce simple solutions that in turn lead to isn’t working (well), and what course changes need to lesser or simplified changes as the product evolves. be made to a team’s — or an organization’s — existing Agile methods also tend to improve design quality processes. In an agile context, a retrospective is typi- throughout the design cycle by employing a practice cally done to improve the software development of continuous testing and code integration, which process, but we argue that it can be used to evaluate results in earlier defect detection and less expensive and suggest improvements in any business process. defect resolution overall.6 One issue with traditional retrospectives is that they These same principles and techniques can be employed are often very qualitative in nature, which can lead as we look at our own business model. Frequent inspec- to a high degree of subjectivity when evaluating the tion and adjustment of our business processes can results. In this article, we discuss retrospectives as they result in a highly optimized organization — or lead us relate to continuous improvement of a team’s business in the wrong direction. What’s important is that we processes, with an eye toward measuring the effects of evaluate the changes we make and the frequency with changes that are made as a result of a retrospective. We which we do so. introduce a new technique that allows for a quantitative analysis of a retrospective and enables a team to evalu- Retrospectives ate the results of its empirically based process improve- In crafting the now famous Agile Manifesto, the authors ment efforts over time. This approach to retrospectives laid out 12 principles behind agile methods. One of lets a team track its processes to determine if a “process those principles states: improvement” truly improved the team’s processes or caused them to take a turn for the worse. At regular intervals, the team reflects on how to become more effective, then tunes and adjusts its behavior accordingly.7 THE AGILE APPROACH AND EMPIRICAL Thus, agile development teams will pause periodically PROCESS IMPROVEMENT to evaluate their inner workings and the environment Agile methodologies have gained considerable interest in which they work. The term “retrospective” was pop- in the IT community over the last several years.1-4 In his ularized by Norm Kerth, author of Project Retrospectives: 8 article “The Coming of a New Organization,” manage- A Handbook for Team Reviews. In the book, Kerth ment theorist Peter Drucker discussed the need to describes how to facilitate an offsite meeting at the end

Get The Cutter Edge free: www.cutter.com Vol. 23, No. 2 CUTTER IT JOURNAL 31 of a project to explore and evaluate “lessons learned” amongst themselves. From this discussion, the team from the project. These retrospectives are a type of produces an action plan that addresses the defects in postimplementation review that (unfortunately) are the existing process or highlights parts of the process to often referred to as “project postmortems”! Later, XP be repeated (see Figure 2). creator Kent Beck adapted retrospectives to fit within an iterative development cycle,9 thereby making them more frequent and increasing the team’s rate of self- QUANTITATIVE RETROSPECTIVES evaluation. In this way, teams gather and apply lessons learned about their development process during the Was the Change Beneficial? project rather than waiting until the end to evaluate So how does a team know whether the changes imple- the entire experience. mented as a result of a retrospective are good or bad? In performing a retrospective, it is helpful for teams to While there may be “a feeling” that things have gotten create a timeline of either the project or the particular better or worse since some modifications were made, time frame that they are looking to evaluate. Basically, a feeling doesn’t really answer the question, “Was the the timeline defines a set of milestones to help the team change we made a good thing?” One way we have recall various aspects of the project and problems or addressed this problem is through something we call successes the team encountered (see Figure 1). As the a “quantitative retrospective.” retrospective proceeds, participants are asked to make In a quantitative retrospective, we ask that each partici- comments about the project using the milestones as ref- pant both categorize the comments he or she made dur- erences. For example, Figure 1 is a timeline from one of ing the retrospective (i.e., indicate what area or topic the our previous projects. comment addresses) and indicate whether a given com- While it’s not very informative, it does allow the team ment was a “positive” comment or a “negative” one. By members to think about the steps that were taken (per- categorizing in this manner, we can not only look at the haps unconsciously) as they moved down the path of overall “feeling” after a project, but also drill down on completing the project. As they look at how their project specific aspects of the project or the team’s performance proceeded, they are asked to make comments about that may be of concern. This categorization effort takes the particular time frame (or think about the comments the guesswork out of interpreting what a participant they would like to make), using the following “key was trying to say. This can be especially important for questions” as a guide: teams that are spread out over one or more geographies where there is no one common language. Retrospectives What did we do well (that we might forget to do next are largely about communication, and in cases where, time if we don’t discuss it)?

What did we learn?

What should we do differently next time? Re-evaluate

Milestones Team Input What still puzzles us?

What needs more discussion? Once the team has had a chance to make comments along the milestones of the timeline, comments are

grouped together and team members discuss them Grouping, Clarification, Discussion

Categorization/Summarization 1. Initial Training 2. Team Formation 3. Stand-Up Meetings 4. Start of Development 5. Middle of the Releas 6. Deployment Perform Next Release/Iteration

Action Plans Modified Process e

Figure 1 — Example of a retrospective timeline. Figure 2 — Diagram of the empirical approach.

32 CUTTER IT JOURNAL February 2010 ©2010 Cutter Information LLC for example, English isn’t a first language, a thought or was a software development project, and the retrospec- comment may be misunderstood (i.e., a negative com- tive was held to evaluate the changes previously made ment that was made sarcastically or tongue-in-cheek to our development process. By doing the retrospective, can be misconstrued as a positive comment). we were attempting to determine how well those changes worked (or didn’t work) and to understand While in this example we chose to evaluate responses whether the changes were being integrated into the based on a simple mechanism of positive versus negative larger organization. experiences, there is no reason why responses could not be more quantitative in nature. For example, rather than For this analysis of our retrospective, we looked for asking participants to comment on positive/negative comments related to team workings, organizational experiences, the facilitator of the retrospective can ask issues with the agile teams, customer interactions, participants to estimate the time saved on a particular and the development environment in which the team task. Values collected could be summarized (removing worked. In some cases, comments that were not cate- high and low values) to determine an average time sav- gorized by the team or that didn’t meet the categoriza- ings as determined by the team. Based on that, decisions tions initially laid out were excluded from the analysis. can be made about fully adopting a change that resulted Obviously, the categorization parameters can be any- in positive results or discontinuing changes that didn’t thing that you wish to observe, and these dimensions produce a strong enough benefit. were simply chosen for the purposes of our example. Other categorizations might be estimated time saved, Another important aspect of this categorization and cost reductions, speed to market, and so on. rating system is that retrospectives can now be looked at over time in a consistent manner. For example, if we As you can see, as a result of the action plan developed at track how well a development team is coordinated with the end of the previous phase of the project, we had an a deployment team (based on the team’s interaction and overall negative experience in this phase of the project retrospective comments), we can look at any of the com- (37 negative comments versus 21 positive). While we ments that were related to, say, “teamwork” or “inter- seemed to have a bit more luck with the relationships action with the deployment” and from a quick count and interteam workings (a delta of +4 in the number of determine how many positive comments versus nega- team comments), it seemed that the changes we imple- tive were made. Obviously, the comments themselves mented from the previous release had an adverse effect need to be examined, but this method allows for a more on dealings with teams outside of our development team accurate general assessment. (the organizational comments), as well as issues in our dealings with the agile stakeholder/customer. As a result Finally, retrospectives are mainly about incorporating of this simple analysis, action plans were put into place better feedback mechanisms into the evaluation of our to address how the team can improve in those areas. business processes. Conducting an effective retrospective can be a challenge, however, as people tend to get Changes Over Time emotional and won’t necessarily “open up” or speak freely if the comments about team members are per- By adding a consistent set of metrics to the various ceived as criticisms. Because of this tendency, many retrospective analysis efforts, we can easily look at teams will solicit anonymous input from the members of our progress in process improvement over time. In the team and consolidate it. This technique allows indi- Figure 3 we show a graph of the change in positive/ viduals who may feel uncomfortable with negative or negative comments from one project phase to the next. controversial opinions the opportunity to express them. For example, the points in the graph at Project 2 represent the change in comments from the prior retrospec- Sample Data tive and assume that the action plan made as a result of the prior retrospective was responsible for some (if In Table 1, we summarize data from one of the four not all) of the change. retrospectives we held for a specific project. The project

Table 1 — Summary of Retrospective Results

Team Organization Customer (Excluded) Environment Total Negative 13 18 6 1 1 37 Positive 17 2 1 0 1 21 Delta +4 -16 -5 -1 0 -16

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50 Team 40

20 Customer 10 Organization Environment 0 Excluded -10

-20 -30

Figure 3 — Effects of organizational changes over time.

By analyzing the trends, we can see that the changes 4Ambler, Scott W. “Has Agile Peaked?” (results of the 2008 implemented in our process at the end of Project 2 had Agile Adoption Survey). Dr. Dobb’s Journal, 7 May 2008 an adverse impact on most of our metrics, except for (www.drdobbs.com/architect/207600615). our dealings within the organization. In focusing our 5Drucker, Peter. “The Coming of a New Organization.” efforts on improving those relationships, other areas In Harvard Business Review on Knowledge Management, suffered. The dark line indicates the overall assessment Harvard Business School Press, 1998, pp. 1-19. of the project based on the retrospective data. 6Lindvall, Mikael, Dirk Muthig, et al. “Agile Software Development in Large Organizations.” Computer, Vol. 37, By analyzing our efforts at process management in this No. 12, December 2004, pp. 26-34. way, we can clearly see the cause/effect of the changes 7 we try to introduce into our development methods. ”Principles Behind the Agile Manifesto,” 2001 (http:// agilemanifesto.org/principles.html). Based on what we learned from previous attempts at 8 process management, we can see in Figure 3 that most Kerth, Norm. Project Retrospectives: A Handbook for Team of our metrics are now trending toward the positive. Reviews. Dorset House, 2001. 9Beck, Kent. Extreme Programming Explained: Embrace Change. Addison-Wesley, 1999. CONCLUSION Matthew Ganis is a Senior Technical Staff Member (and Certified Project retrospectives are a straightforward yet effective ScrumMaster) within the IBM CIO organization and part of the way to monitor team or organization performance. By ibm.com site architecture team. Dr. Ganis is the IBM community of employing a simple mechanism such as a categorization practice leader for Agile@IBM, a galvanizing, grassroots effort of over of the collected input of these retrospectives, one can 10,000 IBM Agile practitioners whose aim is to help share methods, monitor the effects of any changes that have been imple- stories, and advice. He is a member of the Steering Committee for New mented over time. This close attention to the cause and York City’s chapter of the APLN (Agile Project Leadership Network) and serves on the editorial board of the International Journal of effect of suggested process improvements can enable Agile and Extreme Software Development. Dr. Ganis has written practitioners to introduce a more intelligent set of a number of papers/books on his experiences with Agile methods, changes over time and to achieve a higher level of including Practical Guide to Distributed Scrum, published by IBM business performance. Press in January 2010. He can be reached at [email protected]. Lekha P. Panikulangara, IBM India, is the Project Lead for IBM train- ENDNOTES ing and education services application and has used agile methodologies extensively. Ms. Panikulangara has over eight years of experience 1 Beck, Kent, and Cynthia Andres. Extreme Programming in IT with technical expertise in Java/J2EE-based Web applications. Explained: Embrace Change. 2nd edition. Addison-Wesley, 2005. She has practiced agile methodologies, such as Scrum, continuous iter- 2Ambler, Scott W. “Agile Adoption Rate Survey Results,” March ation, and writing effective user stories, and believes in the success of 2006 (www.ambysoft.com/surveys/agileMarch2006.html). these for effective project delivery. Ms. Panikulangara can be reached at [email protected]. 3Ambler, Scott W. “Survey Says ... Agile Has Crossed the Chasm” (results of the 2007 Agile Adoption Survey). Dr. Dobb’s Journal, 2 July 2007 (www.drdobbs.com/architect/ 200001986?cid=Ambysoft).

34 CUTTER IT JOURNAL February 2010 ©2010 Cutter Information LLC DOCUMENTING THE DETOURS Runtime Collaboration and Dynamic Modeling in BPM: Allowing the Business to Shape Its Own Processes on the Fly by Sandy Kemsley

THE MYTH AND REALITY OF AGILE BPM processes in response to current conditions — or when A key goal of business process management (BPM) is instances require special handling — directly in the business agility: allowing the business to take control of runtime environment. its processes and modify them in response to changing Real-world processes include more than system-to- business conditions. Indeed, vendors of BPM systems system integration and heads-down repeatable human (BPMSs) would have you believe that business users tasks: they’re a combination of structured, unstruc- regularly design, deploy, and maintain their own structured, collaborative, and decision-centric business tured business processes with little or no intervention processes. Some processes just can’t be modeled in from IT. advance due to nonstandard processes, changing roles The reality of many BPMS implementations is that the and responsibilities, or the fact that process participants processes are designed by a small project team, usually and actions are dependent on specific conditions. In within IT, with only high-level input from the business. general, knowledge workers work more effectively in Changes to the processes follow a maintenance cycle a flexible goal-oriented environment than a structured that entails weeks (or months) of redesign, reimplemen- environment where every step is dictated in advance. tation, and retesting before deployment of even minor Providing them with collaboration tools within a BPMS process changes. In other words, IT treats the BPMS allows these flexible work practices and outputs to be like a traditional software development tool and wraps captured directly. standard, often semiwaterfall, software development With highly complex knowledge-based processes and lifecycle (SDLC) practices around it. Even in cases tacit interactions, it’s undesirable (or impossible) to where the process modeling tool and the runtime envi- model every possible exception path at design time. ronment are part of the same vendor’s suite, the mod- In such cases, runtime changes to the process are more eler is typically only licensed and available to a few appropriate. Instead of creating a process model that individuals — as you might see with any software is likely inaccurate as well as inflexible, it’s better to development tool — while the runtime environment is allow the user assigned to perform a specific task to available to all users who may participate in processes add collaborators at that step as required to get the job at runtime. Although there are some cases of the busi- done. That doesn’t mean that all steps in the process ness having direct control over the design and ongoing must permit collaboration, of course. Those that are maintenance of its business processes within a BPMS, governed by strict regulations or performed by inexpe- the more typical IT-dominated situation is very slow to rienced workers must be more tightly controlled, with change, for reasons ranging from the technological (the the decision to include collaboration at some steps tools lack support for nontechnical users) to the cultural within a process determined according to governance (IT refuses to hand over design control to the business, requirements, the experience of the participant, and the or the business doesn’t want to take responsibility for nature of the work. process design).

All is not lost, however. Collaboration and dynamic BPM RUNTIME AGILITY runtime process modeling capabilities, now emerging in some BPMSs, allow business users to make changes Dynamic BPM can handle ad hoc and collaboration to business processes without returning to the original scenarios in the context of a more structured business process modeling tools, which typically live within process, blending structured and unstructured work IT’s domain. Users can make immediate changes to while maintaining visibility into the entire process. This

Get The Cutter Edge free: www.cutter.com Vol. 23, No. 2 CUTTER IT JOURNAL 35 is especially useful in cases where there is no predefined originally requested the contract — in order to ask their “best way” to complete the work; rather, workers need opinions. If Tina and Jim determine that the terms and to be able to dynamically assign portions of the work conditions are satisfactory as is, Mike completes the to others, who in turn use their own judgment to create step as usual and prepares the documents for signature. and execute the plan on the fly. The BPMS may also feed If either of them believes that the contract must be back information to the process designers on how the revised, Mike sends the contract back to an earlier revi- processes are actually executed, allowing for process sion step following a standard predefined path in the deviations to be structured and standardized where process. The audit trail within the BPMS would show appropriate. that the process instance followed the standard, predefined flow but had two extra people involved in Runtime agility in a BPMS — that is, the ability of a user making a decision at one of the steps. to make changes to the process during execution — is still an emerging capability with a range of functionality Example 2: Jane and the Claimant Who Can’t Let Go and names. “Dynamic BPM,” “ad hoc collaboration,” “unstructured processes,” and “case management” are The more complex form of runtime collaboration within among the names analysts and vendors use to describe a structured BPMS is dynamic process modeling. This similar functionality. allows the user to create a completely new multistep subprocess that is called, is executed, and returns to the The key functionality is to allow process participants current task before continuing the structured process. within a structured process to make changes to the spe- This doesn’t modify the process before or after that cific instance of the process step that has been assigned step; it simply expands the functionality at that step to them. They’re not changing the “master” process to include one or more new steps, complete with role template; they’re only changing the specific process assignments to other participants. Although decomposi- instance on which they are working. Furthermore, tion of a step into a subprocess is standard functionality they’re only changing the functionality at the specific during process modeling, allowing a user to decompose step, or task, to which they have been assigned. a step dynamically at runtime is much less common, Example 1: Mike and the Questionable since it requires a (usually simplified) version of the Contract Conditions process modeler to appear within the process runtime environment, as well as the ability to modify only this The simplest form of this is to allow the user to collabo- in-flight process instance. rate on his assigned task with others without changing Jane is a property insurance claims adjuster. Although the process flow. He can expand the visibility of the much of her work is classic case management, where task to allow one or more people to view and work she may add, review, and process information within on the task before he completes it, or he can even a claims file as it arrives, there are many situations that allow others to complete the task for him. Many BPMSs require her to collaborate with others. Some claims provide this type of ad hoc collaboration within a pre- activities are performed by other people, such as field defined step, or there’s a simpler version that allows a adjusters and data entry operators, but it is not known user to reassign or reroute a task that has been assigned in advance who may be involved at what point in the to him, although that approach often doesn’t provide process. multiuser collaboration capabilities. When processing a specific auto claim, Jane requires an Mike is a purchasing agent within a large enterprise auto appraiser to procure and approve repair estimates. assigned the step in a new vendor contract process of If the estimate is over a certain amount, it must be preparing the final contract documents for signature. reviewed by Jane’s supervisor before she can complete Although the contract has already passed through the work. If the estimate indicates that the auto will be the predefined steps for legal review and executive scrapped rather than repaired, she would normally con- approval, he notices that the terms and conditions do tact a salvage company. In a particular case, however, not agree with those on an existing contract with the the insured has requested that the vehicle be returned to same vendor. Since he wants all participants and deci- him. Jane creates a dynamic subprocess that forwards sions to be captured in the audit trail, he uses the collab- the claim file to the auto appraiser, then either sends it oration capability of the BPMS to attach the old contract on to Jane’s supervisor if the repair estimate exceeds her for reference and to add two other people to the task — limit, or returns it to Jane if the estimate is within her Tina in Legal, and Jim, the departmental manager who

36 CUTTER IT JOURNAL February 2010 ©2010 Cutter Information LLC limit or if the vehicle is to be scrapped. If the vehicle tools for social interaction and social production. This is to be scrapped, an additional step instructs Jane to is exacerbated by the under-30 “Net Generation” enter- arrange with the insured to pick up the vehicle, rather ing the workforce, expecting to use social networking than having it handled by salvagers. The audit trail concepts for collaboration and content creation. for that claim process shows the new steps that were Second, organizations are beginning to recognize the added to the original process, who participated in each value of collaboration. Although many soft benefits step, and the inputs and decisions of each participant. have been claimed for applications that focus on social Process designers may view this audit trail at a later interaction to strengthen weak ties within a large orga- time and incorporate Jane’s process “detour” as a path nization, the more concrete returns on investment are that can be selected within the standard claims adjust- coming from goal-oriented social production, such as ment process. collaborative content creation in a wiki or collaboration at a step in a business process. Capturing Collaboration Although these may seem like simple use cases, runtime collaboration provides a significant benefit by allowing this type of ad hoc collaboration to be dynam- If in-system collaboration is not allowed, ically modeled and executed within the BPMS, and users will still collaborate — they’ll just do hence monitored and managed as part of that process it using unmonitored, unmanaged methods instance. This is critical for processes that are regulated such as e-mail or telephone. or audited for compliance, where it’s important to know who provided input on a process instance. It’s also important to recognize that if in-system collaboration is not allowed, users will still collaborate — they’ll just A third key driver for BPM runtime collaboration is the do it using unmonitored, unmanaged methods such as mismatch between the vision of BPMS agility and the e-mail or telephone, and there will be no record in the reality of implementation. Many BPMS implementations BPMS of that collaboration. produce systems that are almost as rigid as the systems In addition to this range of runtime collaboration func- that they replace, with static rules, processes, and user tionality, the BPMS may capture the “as executed” run- interfaces that require weeks or months to modify. In time path and feed the user-created changes back to the today’s world of personalization, every customer-facing process designer for incorporation into later versions process can have unique characteristics and may require of the structured process model. This highlights three special handling that was not considered at process ways in which a process instance can execute: design time. BPMSs have the potential to create highly agile systems, but they are often misused to create the 1. The process instance runs exactly as the process new generation of legacy systems. was designed. As the product capability issues are resolved, it 2. The process instance is modified during execution, becomes clear that technological capacity isn’t enough but with a one-time change that is unlikely to be to ensure adoption. Runtime collaboration requires repeated. an organization to move toward a more participatory 3. The process instance is modified during execution, culture, where management gives workers some level and the modification is incorporated in the standard of control over how their work is executed, and the process design for all future processes. workers become active participants rather than passive consumers of predefined business processes. Although workers are collaborating outside of the BPMS now, DRIVERS AND CHALLENGES they’re doing so using methods that are not audited. There are multiple drivers for runtime collaboration Officially sanctioning collaboration and moving it into within a BPMS. First, consumer social software (Web the BPMS requires a higher degree of trust by all parties 2.0) and its enterprise social software counterpart since it permits greater worker flexibility but also allows (Enterprise 2.0) have changed expectations for how greater visibility by management into the details of that users interact with other users, driving the adoption of flexibility.

Get The Cutter Edge free: www.cutter.com Vol. 23, No. 2 CUTTER IT JOURNAL 37 BPMS PRODUCTS THAT SUPPORT Interstage BPM also enables users to perform data min- RUNTIME COLLABORATION ing on the process audit trail — the record of how the Many BPMS products provide the ability to collaborate process was actually executed, as opposed to how it in some fashion at a predefined process step. This was designed — in order to determine the most com- ranges from basic functionality, where the user can monly executed paths. These can then be fed back to reassign or reroute the task to a different user, to more the process analyst for inclusion in the predefined struc- complex multiperson collaboration that may involve tured process in order to reduce the amount of dynamic capturing feedback and voting. This is fast becoming modeling required during execution. Although other core functionality required of any mainstream BPMS. BPMSs allow the audit trail to be examined for potential changes to the original process, Interstage BPM’s process discovery engine automates much of the analysis. Runtime collaboration and dynamic modeling allow for discussion and collaboration to THE FUTURE OF RUNTIME COLLABORATION occur within the context of a structured New functionality continues to be developed by BPMS process, while maintaining governance product vendors, as well as being the subject of BPM over the process. research. One trend is to improve the user experience during collaboration by adding instant messaging and other rich synchronous tools such as online meetings and shared whiteboards. Presence indicators can show Only a few products, however, allow the user to create which potential collaborators (either specific individuals new process steps at runtime that branch out from the or those in a particular role or with a desired skill set) predefined step: a subprocess defined on the fly that are available at any given time, regardless of their phys- maps the user-created collaboration at that point. Two ical location, and the tool can be invoked directly at that vendors, at the opposite end of the size spectrum, are point for immediate collaboration. By tying these tools pioneers in this area: directly to the process step, the conversation — whether 1. HandySoft’s BizFlow BPM handles standard struc- typed chat, voice, or video — can be captured as content tured processes, but its main focus is on ad hoc and attached to the process instance to provide a complete dynamic (unstructured) processes, where a user audit trail of the decision making at that step. This func- needs to jump out of an existing process definition tionality is well within the scope of current technology. at a particular step to an unstructured flow and A second trend, indicated by emerging research, moves bring the results back to the structured process. An beyond Interstage BPM’s process discovery capabilities e-mail-like interface is used to define and instantiate a to automatically mine and analyze process variants in dynamic process, which is composed of an unordered order to determine which are important enough to jus- list of subtasks with deadlines and assignments, but tify updating the original process model. Techniques all processes are managed and monitored by the include heuristic search algorithms for determining the BizFlow engine. “important” variants, using a fitness function that con- 2. Fujitsu’s Interstage BPM allows a process participant siders the similarity to the original process model and to add simple subtasks at a point in the process the most common changes among the variants, and a (similar to HandySoft BizFlow BPM) or to create search tree to converge on the best fit. Although this a subprocess with subtask order linked by inter- capability is still at the research stage, it forms the basis dependencies. Each dynamically defined subtask for a future of self-optimizing processes. is assigned one or more participants, priority, due date, and dependencies on other subtasks. CONCLUSION In both cases, control is passed to the dynamic subtasks and then returned to the calling task when all subtasks Structured processes involving human steps, particu- are completed, after which the process continues on its larly those with a high degree of tacit interactions, can’t previously defined structured path. The status for the always be implemented as a standardized assembly line subtask is shown along with the task status, which of steps. Runtime collaboration and dynamic modeling provides for the necessary transparency and auditing. allow for discussion and collaboration to occur within the context of a structured process, while maintaining governance over the process.

38 CUTTER IT JOURNAL February 2010 ©2010 Cutter Information LLC Runtime collaboration is not a panacea for business Sandy Kemsley is an independent analyst, systems architect, and blog- agility: it must be performed manually on each individ- ger who specializes in business process management and Enterprise ual process instance, which is clearly a waste of effort if 2.0. During her career of more than 20 years, she has started and run the user modifications are (nearly) the same each time. successful product and service companies, including a desktop workflow and document management product company and a 40-person However, it allows a user to handle process exceptions services firm specializing in BPM and e-commerce. Ms. Kemsley was while still monitoring and managing all process steps FileNet’s (now IBM) Director of eBusiness Evangelism during the within the BPMS, rather than losing control and visibil- launch of its eProcess BPM product, and she has been a featured ity through the use of ad hoc collaboration methods speaker on BPM and its impact on business at conferences and cus- such as e-mail outside the BPMS. Furthermore, some tomer sites in several countries. Currently, Ms. Kemsley practices as BPMSs allow these user-generated exception paths to be a BPM analyst and architect, performing engagements for end-user analyzed, optimized, and reintroduced into the main organizations and BPM vendors. She also writes the popular “Column structured process flow, thereby eliminating the need 2” BPM blog at www.column2.com and is a contributing author on for some of the manual collaboration and dynamic several social media–related blogs. Ms. Kemsley can be reached at [email protected]. modeling in the future. Although a business-controlled, agile BPMS design cycle may still be in the future, BPMS runtime agility is well within our grasp.

CORRECTION

In the December 2009 CITJ, we misrepresented data in Figure 4 of Tom Lodahl and Kay Lewis Redditt’s article “IT Governance for IT Effectiveness.” It should have read “CIOs included (54.5)” and “CIOs excluded (49.4).” The Web version has been corrected. We apologize for the error.

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