Chapter 1

Business Process Management

(Concepts and Definitions)
 Definitions
• Some definitions of Business:
– person/ corporation engaged in commerce,
manufacturing, or a service;
– profit-seeking enterprise (people/teams are
involved for a specific outcome;
– refers to individuals, interacting together, to
perform a set of activities to deliver value to
customers and a return on investment to the
stakeholders)
• Definitions of Management:
– the act or manner of managing;
– handling, direction or control;
– executive ability;
– the person or persons controlling and directing the
affairs of a business or institution 2
 Business process
• BP is "a collection of related, structured
activities that produce a service or product
that meet the needs of a client”
• Performed in coordination to realize a
business goal
• In an organizational and technical
environment
• Each process is enacted by a single business
or it may interact with processes performed
by other enterprises. 3
A business process example

4
Process Hierarchy

5
 What is Business Process
Management?
• Business Process Automation (BPA) - involves
automating some aspect of the business process
through the application of information technology.
• Business Process Improvement (BPI) - involves
employees looking for ways to improve the process
incrementally.
• Business Process Transformation (BPT) - examines
how the business operates and then looks for ways
to fundamentally and radically change those
operations.

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 Business Process Management
• Management approach focused on aligning all
aspects of an organization with the wants and
needs of clients.
• BPM is when the organization attempts to improve
efficiency and effectiveness of their operation by
focusing on their business processes.
– Companies normally hire when the economy is booming.
– Companies look for ways to cut costs during down
economic times.
• Downsizing is one option where companies reduce the number of
jobs while attempting to increase productivity.
• It could be described as a "process optimization
process 7
Relationship diagram

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 What does BPM involve?
• Understand the process architecture of an
organization (discover and model processes –
process mapping)
• Assess process performance (extract,
manipulate and calculate process information)
• Simulate processes (move from “as-is” to new
process, and process orchestration, designs –
“to-be” processes)
• Improve in reality process architecture and
performance 9
 Why BPM?
• Business processes are the key instrument to
decompose firms’ value chains into networks of
activities (and buffers)
• BPM makes it possible to align companies towards
customer requirements
• BPM enables businesses to organize an increasingly
large number of activities effectively and efficiently
(by measuring and evaluating firm’s performance
and by constantly re-designing firm’s process
architecture according to its strategic goals)
• Enables organizations to be more efficient, effective
and capable of change than a functionally focused,
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traditional hierarchical management approach.
 Modelling, Analysis, Design and
Measurement of Processes
• Practice of BPM requires the measurement and supervision
of process performance
– Setting process performance goals
– Measuring actual performance, the efficiency of the business
processes (“doing the thing right“)
– Reviewing the effectiveness of business processes (“doing the right
thing“)
– Providing information, insight and feedback to other primary
activities such as process analysis, design and transformation

• Gather information at key points in the process to support

decisions regarding cost or timing
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 Business Process Management
(BPM) includes
• Concepts
• Methods
• Techniques

• To support the
– Design
– Administration
– Configuration
– Enactment
– Analysis
• … of business processes
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 BPM Lifecycle (1)

• The BPM activities are affected by several factors:

leadership, values, culture and beliefs factors
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 BPM Lifecycle (2)

•Iterative, phased set of activities

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 BPM Lifecycle (2)
• Process Planning and Strategy

– Sets the strategy and direction for the BPM process

– Plan starts with an understanding of organisational strategies

and goals

– Provides a foundation for a holistic BPM approach to ensure

the alignment with organisational strategy and the
integration of strategy, people, processes and systems across
functional boundaries

– Identifies appropriate BPM organisational roles and

responsibilities, executive sponsorship, goals and expected
performances measures and methodologies 15
 BPM Lifecycle (2)
• Analysis of Business Processes

– Takes information from strategic plans,

process models, performance measurements,
changes in the environment and other factors
in order to fully understand the business
processes in the context of the overall
organisation

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 BPM Lifecycle (2)
• Design and Modelling of Business Processes

– Document the sequence of activities, including the design of

what work is performed, at what time, in what location, by
what process actors using what methodology

– Defines what the organisation wants the process to be and

answers the what, when, where, who and how questions of
how end-to-end work is executed

– Ensures that the proper management controls and metrics

are in place for compliance and performance measurement

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 BPM Lifecycle (2)
• Process Monitoring and Controlling

– Continuous measuring and monitoring of business

processes provides the information necessary to
adjust resources in order to meet process objectives

– Measuring and monitoring also provides critical

process performance information through key
measurements related to goals and value to the
organisation

– Analysis of process performance information can

result in improvement, redesign or reengineering
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activates
 BPM Lifecycle (2)
• Process Refinement

– Implements the output of the iterative

analysis and design cycle

– Addresses organisational change

management challenges

– Aimed at continuous improvement and

process optimisation 19
 BPM life-cycle (3)
Business process management activities can
be grouped into five categories:
– Design
– Modeling
– Execution
– Monitoring
– Optimization

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 Design
• Process Design encompasses both the
identification of existing processes and the
design of "to-be" processes.
• The aim is to ensure that a correct and
efficient theoretical design is prepared.
• The proposed improvement could be in
human-to-human, human-to-system, and
system-to-system workflows, and might target
regulatory, market, or competitive challenges
faced by the businesses. 21
 Modeling
• Modeling takes the theoretical design and
introduces combinations of variables (e.g.,
changes in rent or materials costs, which
determine how the process might operate
under different circumstances).
• It also involves running "what-if analysis" on
the processes:
– "What if I have 75% of resources to do the same
task?"
– "What if I want to do the same job for 80% of the
current cost?". 22
 Execution
• Process Automation is:
to develop/purchase an application that executes
the required steps of the process,
to use a combination of software and human
intervention - more complex => difficult
documentation proces.
• Developed software enables the full BP to be
defined in a computer language directly
executed by the computer.
– The system will use services in connected
applications to perform business operations, or,
when a step is too complex to automate, will ask
for human input.
• A business rule engine can be used to drive
process execution and resolution 23
 Monitoring
• Tracking of individual processes, so, that
– information on their state can be easily seen, and
– statistics on the performance of one or more processes
can be provided.
• Degree of monitoring depends on
– what information the business wants to evaluate and
analyze and
– how business wants it to be monitored, in real-time, near
real-time or ad-hoc.
• Process mining is a collection of methods and tools
related to process monitoring.
– The aim of this is to analyze event logs extracted through
process monitoring and
– to compare them with an a priori process model.
• It allows to detect discrepancies between the actual
process execution and the a priori model. 24
 Optimization
• Process optimization includes
– retrieving process performance
information from modeling or monitoring
phase;
– identifying the potential or actual
bottlenecks and the potential
opportunities for cost savings or other
improvements; and then,
– applying those enhancements in the design
of the process. 25
Business Process Management and
Information Systems

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 A Business Process Management
System (BPMS) is
• Software that
– Is driven by explicit process representations
• To coordinate
– The enactment of business processes

• BPMS contain graphical notations to express

orderings between activities of a business
process (BPMN)

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 Critical components of a BMP Suite
• Process engine – platform for modeling and
executing process-based apllications
(including business rules)
• Business Analytics – identification business
issues and reaction accordingly
• Content Management – system for storing
and securing electronic documents
• Collaboration Tools – remove communication
bariers, dynamic workspace
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