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Computing the Cost of Business Processes Computing the Cost of Business Processes Dissertation an der Fakult¨atf¨urMathematik, Informatik und Statistik der Ludwig-Maximilians-Universit¨atM¨unchen zur Erlangung des Grades Doctor rerum naturalium (Dr. rer. nat.) vorgelegt von Partha B. Sampathkumaran M¨unchen, January 9, 2013 Erstberichterstatter: Prof. Dr. Martin Wirsing Zweitberichterstatter: Prof. Dr. Hubert Baumeister Tag des Rigorosums: 25.01.2013 i To my parents, without whom this would not have been possible. ii Abstract Designing and optimizing a business process based on its financial parameters is a chal- lenging task. It requires well defined approaches, actions and recommendations which when implemented lead to tangible and quantifiable results. The resulting business process has to minimize the expenses for the business actors and maintain the estimated profitability. In recent years, after service oriented architecture and business processes have taken center stage, a lot of research has been done to establish methodologies which evaluate and optimize business process implementation. New fields of research have come up forefront which makes implementation of business processes feasible and profitable for organizations. These estab- lish a management perspective to the implementation of a service, stressing upon financial and economic factors such as returns, the cost of implementing a service or making sure that there is reliability in the service being offered. Existing frameworks recommend best prac- tices which optimize business process by considering them with surrounding soft factors such as behavioral aspects of involved human resources and accordingly evaluate the success (or failure) of the process. Nevertheless computing the cost of a business process such that it is a tangible and measurable value continues to be a complicated and cumbersome process. Estimating the profitability of an idea before it is implemented is a difficult task and the need for techniques which allow us to do this as early as possible play a very important role in decision making. This requires business process design approaches and practices that in- corporate techniques for tangible evaluation of expenses and benefits for each implementation. In this work we propose a new methodology by which the cost of a business process is calculated by considering the cost and reliability of each action or task in the process. The methodology breaks the business process, represented using 'Business process model and no- tation (BPMN)', into repetitive patterns and a cost and reliability factor for each of these patterns is calculated. As a result the overall cost, reliability and the cost incurred to achieve one successful execution of the business process, the business cost of the process, is achieved. Based on this concept we propose an extension of financial and economic parameters to theo- retical foundations representing service invocation and execution of long running transactions. We use Sagas as basis for this extension. Long running transactions are Sagas when they can be broken down as sequence of transactions which interleave with other transactions. We have implemented the new methodology to examine individual business processes with the help of sensitivity analysis so as to find problem areas where an optimization can be implemented. Using this methodology the study evaluates different existing frameworks and well-known best practices and their financial impact on the processes. The study is backed by an application (Java based) which automates the evaluation process. iii Zusammenfassung Die Gestaltung und Optimierung eines Gesch¨aftsprozessesauf der Grundlage seiner fi- nanziellen Parameter ist eine herausfordernde Aufgabe. Diese setzt wohldefinierte Ans¨atze, Handlungen und Empfehlungen voraus, die in ihrer Umsetzung zu konkreten und quantifizier- baren Ergebnissen f¨uhrensollen. Der daraus resultierende optimierte Gesch¨aftsprozesssoll die Aufwendungen f¨urdie Entscheidungstr¨agerminimieren und die erwartete Rentabilit¨at erh¨ohen. In den vergangenen Jahren stand die Service oriented architecture im Mittelpunkt und die Forschung wurde vor allem mit dem Ziel betrieben, Methoden zu entwickeln, welche die Im- plementierung von Gesch¨aftsprozessenevaluieren und optimieren. Diese Ans¨atzenehmen eine Managementperspektive bei der Umsetzung von Dienstleistungen ein und betonen finanzielle und ¨okonomische Faktoren wie Rentabilit¨at,die Kosten der Leistungserstellung oder die Ab- sicherung der Zuverl¨assigkeit der angebotenen Dienste. Die bereits bestehenden Systeme empfehlen bew¨ahrteVerfahren (Best practice) zur Optimierung der Gesch¨aftsprozesse,die deren vollst¨andigeAbl¨aufeber¨ucksichtigen und dabei auch verbundene weiche Faktoren wie das Verhalten der Humanressourcen einbeziehen, um so den Erfolg oder Misserfolg der ver- schiedenen Prozesse zu bewerten. Dennoch bleibt die Berechnung der Gesch¨aftsprozesskosten ein komplizierter und umst¨andlicher Vorgang. Die Absch¨atzungder Rentabilit¨ateiner Prozes- sinnovation vor ihrer Implementierung stellt eine schwierige Aufgabe dar und Techniken, die dies so fr¨uhwie m¨oglich leisten k¨onnen,spielen eine wichtige Rolle bei der Entscheidungs- findung. Dies erfordert Ans¨atzezur Gestaltung von Gesch¨aftsprozessenund Praktiken, die Methoden f¨ur die quantifizierbare Bewertung von Aufwendungen und Ertr¨agenf¨urdie ver- schiedenen denkbaren Umsetzungen der Prozesse beinhalten. In dieser Arbeit wird ein neuer Ansatz vorgeschlagen, welcher die Kosten eines Gesch¨afts- prozesses auf der Grundlage der Kosten und Zuverl¨assigkeit jeder einzelnen Handlung oder Aufgabe des Prozesses berechnet. Diese Methode unterteilt den Gesch¨aftsprozess,dargestellt durch ein Business process model and notation (BPMN), in sich wiederholende Muster und berechnet einen Kosten- und Zuverl¨assigkeitsfaktor f¨urjedes dieser Muster. Als Ergebnis werden die gesamten Kosten, die Zuverl¨assigkeit und die durch eine erfolgreiche Umsetzung des Gesch¨aftsprozessesverursachten Kosten, die Business cost, ermittelt. Die Arbeit nutzt diesen Ansatz und schl¨agteine Erweiterung von finanziellen und wirtschaftlichen Parame- tern als theoretische Grundlage f¨urdie Darstellung von Serviceaufrufen und die Ausf¨uhrung von langfristig laufenden Transaktionen vor. Als Basis f¨urdiese Erweiterung wird Sagas be- nutzt. Langfristig laufende Transaktionen sind Sagas, wenn sie unterteilt werden k¨onnenin eine Abfolge von Transaktionen, die mit anderen Transaktionen verschachtelt sind. Mit der Umsetzung dieses Ansatzes kann man individuelle Gesch¨aftsprozessemit der Hilfe einer Sensi- tivit¨atsanalysebewerten und Problembereiche eingrenzen, die optimiert werden k¨onnen.An- iv hand dieser Methodologie analysiert die Arbeit verschiedene existierende Systeme und bekan- nte bew¨ahrteVerfahren in Bezug auf ihre finanziellen Auswirkungen auf Gesch¨aftsprozesse. Die Arbeit wird von einer Java-basierten Applikation unterst¨utzt,welche diesen Evaluierung- sprozess automatisiert. Acknowledgement I thank my supervisor Prof. Dr. Martin Wirsing for his support and guidance without which this thesis would not have been possible. Under his supervision I have developed and evolved professionally. The friendliness and warmth with which Prof. Dr. Martin Wirsing supervised me is unforgettable. Even with his very busy and com- pletely packed schedule he has always had time for my discussions and has been easily approachable. I treasure this time and work with him. I also thank Prof. Dr. Hubert Baumeister for being the second referee. I thank him for his comments and evaluation of my thesis. I also thank the colleagues at the PST (Programming and Software Technique) chair for the constructive discussions. They have always been very welcoming and have helped me with this work. Some of my discussions with Mirco Tribastone, Moritz Ham- mer and others have had a deep impact on my work. I take this opportunity to thank them. This thesis would not have been possible without the support of my parents, my sister Padmashree, her husband Dirk, and my wife Arundhathi. I thank them for their patience and understanding during this phase. vi Contents Abstract iii Zussamenfassung iv Acknowledgement vi Contents vii 1 Introduction 1 1.1 Financial evaluation and optimization . .2 1.1.1 Case study 1 - A money transfer process: . .3 1.1.2 Case study 2 - Hotel booking process: . .5 1.2 Aim . .6 1.2.1 Structure of this document . .7 1.3 Related Work . .9 1.4 Conclusion . 13 2 Business process frameworks 14 2.1 CIMOSA . 15 2.2 Work centered analysis framework . 19 2.3 Mobile model . 20 2.4 Extended framework for business process reengineering . 23 2.5 Conclusion . 25 3 Cost, reliability and business cost: performance management and modeling 26 3.1 Cost . 27 3.1.1 Cost models . 29 vii 3.2 Reliability . 30 3.2.1 Reliability Models . 30 3.3 Business cost . 33 3.4 Performance evaluation techniques . 34 3.4.1 Performance pyramid . 34 3.4.2 Performance measurement matrix . 34 3.4.3 Results/Determinants Matrix . 35 3.4.4 Balanced scorecard . 37 3.4.5 Devils quadrangle . 38 3.5 Conclusion . 38 4 Business process model and notation 41 4.1 Aim of BPMN . 41 4.2 Elements of BPMN . 42 4.2.1 Event . 42 4.2.2 Activity . 43 4.2.3 Process/Sub-process (non-atomic) . 44 4.2.4 Gateway . 44 4.2.5 Sequence Flow . 45 4.2.6 Data object . 46 4.2.7 Message . 46 4.2.8 Fork . 46 4.2.9 Join . 47 4.2.10 Decision, Branching point . 47 4.2.11 Looping . 48 4.2.12 Other elements . 48 5 Cost calculation with patterns 54 5.1 Representation of cost and reliability in BPD's . 56 5.2 Patterns for cost calculation . 57 5.2.1 Pattern 1: n tasks in a sequential order . 58 5.2.2 Pattern 2: n tasks in a parallel order . 60 5.2.3 Pattern 3: Conditional branching . 62 5.2.4 Pattern 4: "n" successive possibilities . 63 5.3 Putting Patterns together . 65 5.3.1 Sequential Patterns . 65 5.3.2 Patterns in parallel combinations . 67 5.3.3 Patterns with error flow . 67 5.4 Patterns triggering Compensation . 68 5.5 Cost Analysis through Sensitivity Analysis . 69 5.5.1 Case study: bank burglary scenario . 72 5.6 Conclusion . 76 6 Theoretical basis for cost calculation 80 6.1 Sagas . 81 6.2 Definitions . 82 6.3 Basic task semantics . 85 6.4 Tasks in a sequential order . 86 6.5 Patterns .
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