BIDA BI101 BPA Lecture 1 - Introduction to BPM (WEEK 1).pdf

Botswana Accountancy College School of Computing & Information Systems Degree: BSc. (Hons) Business Intelligence & Data Analytics Module: Business Process Analysis Lecturer: VM Lecture 1: Introduction to Business Processes Analysis...

Botswana Accountancy College School of Computing & Information Systems Degree: BSc. (Hons) Business Intelligence & Data Analytics Module: Business Process Analysis Lecturer: VM Lecture 1: Introduction to Business Processes Analysis Key Terms in BPA Reference: Business Analysis (2nd Ed.), D. Paul at-el, 2010  Course structure Process Weeks 1:Intro. identification Weeks 2-3 Process discovery Weeks 5-6 Process EXCLUDED monitoring and WeekS 10-12: Process Weeks 7-9 controlling analysis Assignment And Revision Process Process EXCLUDED implementation redesign EXCLUDED 2  Objectives 1. Business Process Definition 2. Process Analysis Basics & Documentation 3. Process Types & Hierarchy 4. Process Architecture 5. Summary 3  What is a Business Process? 1. A pragmatic definition A Business Process describes how something is done in an organization In general terms… Business - Organizational entity that deploys resources to provide customers with desired products and services Process (Merriam-Webster’s Dictionary) (i) A natural phenomenon marked by gradual changes that lead to a particular result (ii) A natural continuing activity or function (iii) A series of actions and operations conducing to an end 4  What is a Business Process? 2. Traditional Process definition in OM literature A process specifies the transformation of inputs to outputs Inputs Process Outputs The transformation model of a process Different types of transformations Physical (Ex. raw material  finished product) Locational (Ex. flying from Denver to L.A.) Transactional (Ex. depositing money in a bank) Informational (Ex. accounting data  financial statement) 5  What is a Business Process? The Process View  Any organization entity or business can be characterized as a process or a network of processes  Based on the simple transformation model of a process  Has its origin in the areas of manufacturing and quality Inputs Process Outputs The transformation model of a process 6  What is a Business Process? 3. A more comprehensive process definition A business process is a network of connected activities and with well defined boundaries and precedence relationships, which utilize resources to transform inputs into outputs with the purpose of satisfying customer requirements Resources Process Suppliers Inputs Outputs Customers 7  What is “Process Analysis”? Review of existing business functions, activities, and tasks that enable the execution of your department’s operations Identifies key inputs, outputs, dependencies and hand-offs Enables continuous improvement Not just process mapping Usually confused with procedures Often is missing 8 Process Analysis Let’s look at the “black box” in more detail… Why do we need to analyze the process? - To identify inefficient tasks - To spot possible effectiveness improvement tasks - To understand where value can be added How can we analyze a process? Map it! What are the relevant performance measures?  Process vs. Procedure Process ≠ Procedure A process consists of the A procedure refers to underlying functions, activities documented instructions and tasks your organization used by your personnel to must perform to fulfill its perform the actions mission. required to operate your business processes. What are you in the business of doing? How do I do it? 10 Process Analysis: the performance measures Assume a process is in place. What do we need to measure in order to understand how efficient it is? Task 1 Task 2 Task 3 What is its capacity? How many units per unit time go through each task? The process as a whole? What is the bottleneck? Which production step limits the process capacity? What is the throughput time? How long does it take to get through the system? How do we measure capacity? Capacity of a task is the physical limitation in terms of “how much can be processed at this task” Cycle Time: Average time for completion of a unit at a production step or process. Does not include waiting. Measured as time/unit Throughput Rate: Average number of units processed over a time interval. Measured as units/time 1 Key Throughput rate = relationship Cycle Time Capacity = throughput rate Computing Cycle Times Processing a fixed amount of work Example: Producing 100 cars. On average, production takes 5 hours per car. It takes 50 hours to set up the production line. Set-up Time + (Batch size) x (Time per unit) Cycle Time = Batch size Computing Cycle Times Setup time: Production Time: 15 min 25min/unit A B Question: What is the cycle time between points A and B of the process, if we work in batches of 10? What is a bottleneck? Bottleneck is the process stage with the smallest throughput rate (longest cycle time) Which task is the bottleneck? 3 units/hr 5 units/hr 2 units/hr Capacity of a process The capacity of the process is: minimum throughput rate at any of the stages What is the capacity of this process? 3 units/hr 5 units/hr 2 units/hr How do we measure throughput time? Throughput Time: Average time that a unit takes to go through the entire process (including waiting time). Measured as time Work in Process(WIP): Average number of units in system over a time interval. Measured as units Key WIP Throughput time = relationship Throughput rate (Little’s Law)  Business Process Breakdown These levels can be combined, depending on the complexity of the process. Procedural documentation should focus on describing the actions that occur at these levels. Adapted from the Business Process Management Institute, “Analyzing the ‘As-Is’ Process”. 18  Why is documenting process functions, activities and tasks important? Reduces operational ambiguity Continuity of operations Useful as a training tool Auditors will ask and test Identifying what process functions, activities and tasks are Helps identify measurable results Knowing what you’re trying to accomplish/purpose Aligning processes with your units mission and goals Aligning processes with the University mission and goals You can’t improve your process if you don’t know what it is 19  Why is documenting process functions, activities and tasks important? Identifies value added and non value added tasks Identifies design inefficiencies/gaps Identifies internal controls Automation (evaluate and change your process before you automate) Gives a better understanding of how processes relate Helps identify strengths and weaknesses Reduces risk 20  Before you start-think about the following: What do your customers (internal or external) require (output) What do you require from your suppliers (input) Do you know of any gaps (expectations, performance or requirements that aren’t being met) Any current data What happens now? 21  Now what do I do? Plan Analyze Research Prewrite Draft Format Review/Test Edit Approval 22  What should a process document look like? Title Goal and Objective How often is the activity performed? Who owns the activity? – Department – Office – Responsible person Dates Step by step (task) – Include links to documents, laws, policies, other documents How to do it = procedure Define your terms and acronyms 23  Process Types and Hierarchies 1. Individual processes – Carried out by a single individual Make up 2. Vertical or Functional processes – Contained within one functional unit or department Make up 3. Horizontal or Cross Functional processes – Spans several functional units, departments or companies 24 Illustration: Process Types and Hierarchies CEO Marketing Operations Accounting Buying a TV commercial Order Request Production planning Order Fulfilled Individual process Vertical process Horizontal process 25  Process Types and Hierarchies Core cross-functional processes often have highest improvement potential Core processes – essential for meeting market place demand through a specific strategy Especially high improvement potential if a significant amount of non-manufacturing/service related activities Reasons – Difficult to coordinate – Have not kept up with improvements in manufacturing – Difficult to detect waste and inefficiencies – Often as little as 5% of the time considered adding customer value – Customers more likely to abandon business because of “poor” service than “poor” products 26  Process Architecture Inputs and Outputs Information structure Process Flow units Resources Architecture The network of activities/sub-processes 27  Process Architecture Inputs and Outputs Establish interaction between the process and its environment Identify the process boundaries  easy to identify the Input consumed from the environment in order to produce the desired Output Process inputs and outputs can be – Tangible (Ex. raw material, cash, products, customers) – Intangible (Ex. Information, time, energy, services) Flow units A flow unit is a transient entity or a job that proceeds through the network of activities and buffers and exits the process as a finished output Typically, the identity of a flow unit changes across the process Examples of common flow units: materials, orders, files, documents, customers, products, cash, transactions… Flow rate – The number of jobs flowing through the process per time unit 28  Process Architecture The network of activities and buffers The work performed on a job moving through a process can be divided into an ordered sequence of activities The buffers represent storage or waiting points where the job waits before moving to the next activity (queues, waiting rooms, etc.) Different types of jobs  different paths through the network Defining activities is crucial in process analysis – Tradeoff between process and activity complexity Process Complexity Individual Activity Complexity 29  Process Architecture Resources Tangible assets utilized to perform activities in a process Can be divided into:  Capital assets – real estate, machinery, equipment, IT systems…  Labor – people and their knowledge and skills Resources are utilized while inputs are consumed Information structure Specifies the information required for making decisions and performing activities in a process Limited information availability is a common cause for process inefficiencies – Information enables coordination! 30  SUMMARY Business Process Definition Process Analysis Basics & Documentation Process Types & Hierarchy Process Architecture Questions & Answers Murach’s Java Servlets/JSP (2nd Ed.), C1 © 2008, Mike Murach & Associates, Inc. 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