Business Process Management (BPM) has received increased attention recently, as many organizations view automation as a quick way to reduce costs. In fact, the principal benefits of BPM come from its improvement of process effectiveness, not through reduced headcount. To achieve these benefits, the organization must adopt a staged approach to BPM, proceeding through five steps: •Identify key target processes for BPM implementation. •Document processes using standard process notation. •Refine by reshaping processes to improve effectiveness. •Automate processes to increase effectiveness, consistency, and efficiency. •Control processes by monitoring to avoid business issues. While the stages remain the same from company to company, Info-Tech encourages organizations to choose from three implementation plans that reflect an increasing scale of investment. Use the tools that accompany the set to choose the plan that best matches your organizational and process characteristics.

1. Develop a Business Process Management (BPM) Strategy Practical IT Research that Drives Measurable Results

2. Introduction Info-Tech Research Group Business Process Management (BPM) is a nebulous term fraught with vague descriptions, blurry technology definitions, and very REAL benefits. People often associate BPM with only one of five key activities, which is confusing enough. But when they meet with colleagues who think of BPM solely as a different key activity, the confusion multiplies. BPM manages the entire lifecycle of a process, with technology merely supporting that lifecycle and ONLY where it makes sense. This solution set is ideal for: IT Leaders looking for guidance on how to implement technology to improve processes. Business Leaders looking to improve process effectiveness. Organizations that have not formally adopted a BPM solution. Understand what BPM is, what it’s not, and build a BPM strategy. This solution set will help you: Learn how to get BPM benefits regardless of technology investment. Discover the BPM activities that deliver the biggest benefits. I still get a little confused sometimes. - Consultant with over 20 years of BPM experience “ ”

8. Understand BPM by referring to Info-Tech Research Group’s BPM Reference Framework. Process Library Info-Tech Research Group BPM Activity BPM Components BPMS Suites Modeling Streamline Documentation Simulation Inventory Tool Forms Automation Monitor Identify Document Refine Automate Control Reporting/Analytics BPM Stage BPM Platform Modeling Tool Workflow Automation Use the Info-Tech BPM framework to understand the variety of tools and terminology that BPM professionals use. This solution set will discuss each layer of the framework, demonstrating how the components map to either low investment tools or BPMS suites. Info-Tech BPM Reference Framework BPM supports the continuous improvement of processes, by repeating the key stages as needs change or issues occur.

9. Learn the five key stages of Business Process Management. Info-Tech Research Group List the current business processes that exist in the organization and determine which provide the most opportunity for improvement. Describe the processes using a graphical model. This may be through a diagram or by using consultants to capture processes. Find improvements in the existing processes, by simulating process changes, aka business process reengineering. Replace manual processes with technology-enabled steps. For example, updating data in another system, or escalating an issue to a manager. Monitor the state of process instances, both individually and as a whole to detect issues, which may trigger continuous improvement activities. Following the sequence leads to the greatest benefits in process improvement. But BPM doesn’t always end at the control stage. Those tasked with continuous improvement in the organization will repeat these stages when needs change or issues are identified through control mechanisms. Document Refine Automate Control Identify

10. Identify: The first step to getting started. A business analyst or team managers who have a high-level view of the processes that take place under their domain. Consultants are sometimes used here. Info-Tech Research Group Who does it? An inventory of processes makes it much easier to streamline and consolidate processes across the enterprise. For example, the best practice of a team may end up replacing the process department- or enterprise-wide. Why do it? Involve line managers. Identify the time frame for a single process cycle and isolate the discrete processes under each managers purview. See the Getting to Action section for a detailed explanation of the steps. How do it? Document Refine Automate Control Identify Before you can re-engineer, model, or automate a process, the first thing you have to do is identify team, department, and enterprise-wide processes so that standards can be established.

11. Document: Formally lay out the current processes. Business analysts and process participants should lead the charge. Subject matter experts will be able to provide the best content. Consultants can provide help with documentation as needed. Info-Tech Research Group Once there is a visual representation of the processes , it becomes much easier to see opportunities to improve them through streamlining, and to adopt best practices from teams or departments. Train business users to take the lead in modeling. Use a modeling tool, either a dedicated one like Microsoft Visio or a modeling tool in a BPMS suite. Document Refine Automate Control Identify The document stage diagrams a specific process as a visual or textual model that explains how the components of the process all fit together. Who does it? Why do it? How do it?

12. Refine: Improve before automating. Some refinements will be obvious to the process participants who put the process down on paper. Consultants can recommend additional refinements. Info-Tech Research Group Organizations can take the opportunity to see the effects of process changes with real data and avoid simply paving the cow-path. The refinement stage allows participants to pick the best process before bringing in automation. Some improvements will become obvious as soon as you model the processes. High-level refinements can come with the assistance of consultants. Document Refine Automate Control Identify In this stage, discover and test how processes might be improved to become more effective, through use of simulation tools. Who does it? Why do it? How do it?

13. Automate: Replace manual with software-driven processes. As we discuss in the Tools Overview, your approach to automation will depend heavily on how much you want to invest in your BPM implementation. At the high end, BPM suites will generate automated components for you, directly out of your refined process models. Automation is usually done with the perceived benefit of gaining efficiency. But that is actually a side benefit. The true benefit is effective, consistent process that doesn’t change with the person doing the task. Find processes where human-driven workflow can be replaced with software-driven workflow. Info-Tech Research Group Include business analysts and IT in designing automated processes to replace the current ones, even if the tool is user-friendly enough for a non-IT person to execute. Document Refine Automate Control Identify Automation is a solution that enables activity-based and data driven process steps to be executed by software , or even by a mix of human and software steps. Who does it? Why do it? How do it?

14. Control: Know the state of business processes. Senior managers must monitor dashboard or survey information to find areas for improvement. They should involve business analysts or consultants in finding ways to improve. Info-Tech Research Group The control stage establishes the basis for ongoing improvement of processes . Without proper change management and monitoring, it will be difficult to make changes stick. Have your project sponsor manage the change to the organization. Select 5-10 Key Performance Indicators (KPIs) that reflect your business priorities and monitor process results, to set the foundation for ongoing improvement. Document Refine Automate Control Identify The control stage allows organizations to scrutinize the state of all instances of processes to ensure business activities can be monitored and adjustments made when issues occur. Who does it? Why do it? How do it?

18. Business buy-in is not enough: don’t do BPM if the business isn’t in the driver’s seat. Info-Tech Research Group If support is growing, but the case is not yet firm for enterprise-wide process management, start with IT processes as a pilot project or look for opportunities to make team best practices into departmental standards. You must have business buy-in at a scale that matches the scale of your implementation. Remember that receiving funding from the business does not equate to actual business involvement. Don’t take the business out of business process management! Enterprise-wide buy-in Departmental buy-in Team buy-in The impact of BPM spans the entire enterprise, so enterprise-wide buy-in is crucial to achieve project success. [I]t’s advanced to the point now where the business units can develop their own processes with minor assistance…they’re the ones that know the processes, right? - BPM Consultant “ ”

21. Evaluate net benefit in dollar terms to find the best implementation. 0 Info-Tech Research Group Low High Medium Increasing BPM investment Benefits Value Cost Net Benefit Optimal This is a sample BPM outcome for a particular scenario. Benefits and costs will vary. Benefits based on survey data. Defect rate Delays Cycle time Customizability

22. Understand the impact on businesses stakeholders and budget for each BPM option. Info-Tech Research Group IT resources are typically only half of a BPM project team, the other half is non-IT resources. So it bears repeating: do not take the business out of business process management! High-investment software tools require less integration and custom coding than medium-investment tools, so they impose less on the IT department. (High-investment data based on Lombardi) Cost Low investment Medium investment High investment Software investment $10-15,000 $40-60,000 $100,000+ Management time 1-2 managers per 100 users affected 4-5 managers 2-3 managers IT time 1-2 IT staff per 100 users affected 4-5 IT staff per 100 users affected 1-2 IT staff per 100 users affected BA time 1-2 BA staff per 100 users affected 1-2 BA staff per 100 users affected 1-2 BA staff per 100 users affected Change management inconvenience 1 week per user affected 1 week per user affected 2 weeks per user affected

23. Do not implement solely to reduce resource costs. Design BPM around achievable goals. Info-Tech Research Group High demand for BPM reflects widespread misunderstanding of what it can actually do. BPM likely will not improve resource costs. BPM can reduce project resources, but organizations are much more likely to redeploy these resources, rather than reduce headcount. *BPM improvement numbers are based on Info-Tech survey data, N=73 . Methodology described in the appendix. BPM can improve... Why? Average BPM improvement Defect rates BPM improves the predictability of processes by helping organizations understand how they really function. 10% Frequency of service or product delays BPM minimizes the likelihood of surprises that can delay product or service delivery. 10% Cycle time Process evaluation can reduce the number of steps in processes. 15% Customization and flexibility By providing a window into organizational processes, BPM facilitates mixing and matching components to produce new products and services. 15%

24. Not all benefits are created equal: plan for differing benefits at each step of the BPM project. Info-Tech Research Group While process streamlining and process simulation often get the most BPM attention, organizations that have implemented BPM experienced the greatest incremental success through the modeling and monitoring steps. Simulation improves customizability by providing the ability to quickly adopt new processes without the need for trial and error. Modeling provides the gateway to process improvement but does not make customization any easier on its own. Monitoring solidifies BPM gains by facilitating the process of ongoing improvement. Streamlining process with technology produces only limited benefit on its own. 1 2 3 4 Correlation of BPM stages to success factors amongst those who have completed a BPM project. Source: Info-Tech Research Group N = 73

27. The activities of each stage of BPM will enable the benefits, regardless of the tools used. Info-Tech Research Group Info-Tech research shows that monitoring provides the biggest benefits to process effectiveness gains. Of course, you can’t monitor until you’ve completed all the other steps. The emphasis in this section is on the activities layer of Info-Tech’s BPM Framework. Follow all the activities in sequence to enable process improvement. BPMS Suites Modeling Streamline Documentation Simulation Inventory Tool Forms Automation Monitor Identify Document Refine Automate Control Reporting/Analytics Process Library Modeling Tool Workflow Automation

30. Users should drive the modeling process, but consultants provide invaluable documentation advice and a fresh prospective. Info-Tech Research Group Business process modeling is a significant step for the organization. If either IT or the business perceives that consultants are taking the lead, it will slow adoption. Your in-company resources will resist changing their work habits to follow the advice of outside consultants whose understanding of their processes they will question. Your business users should lead process modeling, not consultants. However, use consultants if help is needed in the following areas: Documentation Streamline Monitor Process Library Modeling Simulation Use Info-Tech’s Consultant Evaluation Matrix to evaluate candidates for the job. Fostering a philosophy of improvement Consultants can help move people away from a “how things are” mindset towards a “how things can be” mindset. Stopping silo thinking Consultants can help orchestrate efforts across departments. Providing formal documentation Consultants help put together formal documentation that line workers or business analysts do not have the skills to construct.

39. Find the implementation path that nets the greatest ROI. Info-Tech Research Group The cost of a BPM implementation will depend on the path you pursue. Almost every organization can benefit from some form of BPM adoption, but the optimal path will vary. Use Info-Tech’s BPM Benefits and Costs Analysis Tool to evaluate whether your organization can benefit from BPM. You may already have the tools needed to get your organization where you want it to be. Understand the components of BPM, and what tools can be used to create a BPM platform. BPMS Suites Modeling Streamline Documentation Simulation Inventory Tool Forms Automation Monitor Identify Document Refine Automate Control Reporting/Analytics Process Library Modeling Tool Workflow Automation

40. Choose a path for BPM adoption that matches the scale of your processes. Inventory Tool Info-Tech Research Group Info-Tech Opportunity Assessment tool Modeling tool (e.g. Visio) Forms automation Low Manual Info-Tech Opportunity Assessment tool Modeling tool (e.g. Visio) Workflow system BI tool BPMS Inventory BPMS Modeling BPMS simulation BPMS automation BPMS dashboards High Mid The wide variety of BPM-related tools available makes it possible for organizations to pick a BPM investment level that works for them. Forms Automation Modeling Tool Workflow Automation Reporting /Analytics Investment levels for BPM tools

42. Use Info-Tech’s BPM Opportunity Assessment Tool to inventory a low or medium-level investment implementation. Low or medium investment Info-Tech Research Group High investment List processes and answer questions about each process. The tool will prioritize those processes for your implementation. List processes in a nested format showing interrelationships. True to the integrated nature of a BPMS system, process relationships described in the inventory phase will carry over to the modeling phase. Info-Tech’s BPM Opportunity Assessment Tool BPMS Process Inventory Module Inventory Tool Forms Automation Modeling Tool Workflow Automation Reporting /Analytics For higher investment implementations, a BPMS inventory module located within a suite will save re-work at later stages of the implementation.

43. Use models to record process flow. Info-Tech Research Group Inventory Tool Forms Automation Modeling Tool Workflow Automation Reporting /Analytics Low or medium investment High investment A modeling tool like Visio allows you to plot the process participants and actions using dedicated symbols and connectors that indicate causality. Models can use a stick-figure format, a cross-functional workflow format, or BPMN notation (in Visio 2010, for example). BPMS suites integrate modeling with process identification. IBM Lombardi, for example, will generate a cross-functional process map directly out of the nested process listing. The user can then update the process model specifics and Lombardi will update the nested process listing in turn. Modeling tool (e.g. Visio) BPMS Process Modeling Module A process model shows the series of actions and participants that constitutes the process. Sample cross-functional flowchart

44. For a low- or medium-level investment, evaluate a workflow management system as a low-cost alternative to a BPM suite. Info-Tech Research Group (Source: Chang) In terms of the automation function itself, workflow automation is as effective as the automation available in a BPMS suite. The key difference lies in the level of integration with the other tools in the tool stack. Low investment Medium investment Forms automation E-forms with automated routing provide cheap automation of human-initiated processes. For example, entry of an automated form on a Website could lead to the creation of a new customer account. Workflow automation Automated workflow allows multiple processes to communicate via a variety of methods, usually through a form of middleware. Processes can be initiated by human interaction or automatically. Inventory Tool Forms Automation Modeling Tool Workflow Automation Reporting /Analytics

45. At a medium investment level, use BI tools for reporting & analytics. Info-Tech Research Group Business Intelligence (BI) tools allow for the storage, analysis, and presentation of data that will influence business decisions. Inventory Tool Forms Automation Modeling Tool Workflow Automation Reporting /Analytics Data visualization Tools such as JMP and Corda allow you to view your process KPIs in an intuitive and immediately helpful display. Alert and notification Major BI suites will notify business decision makers when process metrics go outside of an expected range. Key functionality that you will want in a BPM-focused BI tool includes: Data mining and prediction BI suites offer analytical tools of varying complexity for evaluating why your processes behave as they do and predicting future performance. BI vendors *Not a complete list of vendors. Info-Tech does not endorse any vendor listed.

46. On the high-investment path, leverage the integrated capabilities of a BPM system. BPMS suites improve performance in every phase of BPM The key strength of a BPM system is the integration of the BPM components used to support each stage and activity. Automated code generation reduces the burden on IT. Those who use a BPMS tool show a higher rate of improvement (Source: Info-Tech Research Group) Modeling tools designed for process will speed adoption, due to ease of use. Design processes knowing probable outcomes, using the simulation capability. Forms Automation Avoid hand-coding: BPM systems will generate workflow automation for you. BPM systems will generate a real-time monitoring dashboard for you! Modeling (% improved) Simulation (% improved) Streamlining (% improved) Monitoring (% improved) 100% 100% 100% 100% N=57 N=27 N=45 N=42 Inventory Tool Modeling Tool Workflow Automation Reporting /Analytics

50. Conclusions & Recommendations Info-Tech Research Group BPMS is a powerful set of tools for increasing organizational effectiveness. Know the benefits Despite widespread excitement surrounding cost reduction, BPMS primarily supports improvements in organizational effectiveness. Effectiveness means improving product quality, reducing delay rates, and reducing cycle times. These changes can lead to cost reductions, but do not directly reduce human resource expense. Choose your path Choose the BPM path that matches the scale of your processes. Use Info-Tech’s BPM Benefits and Costs Analysis Tool and the BPM Maturity Roadmap Tool to find the optimal path to success. A full BPMS suite investment will not make sense for everyone. Manage change and implement KPIs The single most important activity for producing BPM results comes in the final phase: monitoring. Institute meaningful KPIs that will allow for continual learning and improvement of processes.

51. Need Additional Support? Info-Tech goes beyond research: Speak directly to an analyst and/or engage on-site consulting services to help your team achieve results. Email our Advisory Team to find out how we have helped other clients and get your BPM initiative started today! Trigger Point: Understanding BPM Defining BPM Documenting and Modeling the Existing Business Processes Our Advisory & Consulting Services Establishment of a common understanding of BPM across the organization Listing of current business processes; identification and capture of processes that provide the most opportunity for improvement with a graphical model Trigger Point: Developing a Strategy for BPM Selection Reengineering of Existing Business Processes Streamlining of Business Processes and BPM Functional and Technology Requirements Gathering Our Advisory & Consulting Services Discovery of improvements in existing business processes by simulation of process changes or reengineering of processes Introduction of technology-enabled changes to manual processes; BPM technology and functional requirements gathering and documentation Trigger Point: Comparing BPM Vendor Offerings Reviewing the Vendor Landscape for Targeted BPM Solutions Developing the Business Case, Selecting and Procuring the BPM Solution Our Advisory & Consulting Services Preliminary vendor short-listing of targeted solutions (i.e., low, medium, or high investment options), based on established functional and technology requirements Business case development, Request for Proposal (RFP) development and vendor response evaluation

52. Appendix

53. Incremental benefits of a BPM implementation are calculated as follows. Info-Tech Research Group 7 – Significantly improved 6 5 4 – Had no impact 3 2 1 – Significantly worsened Defect rate Delay rate Cycle time Customization Q4. Which of the following best … Respondents indicated which answer best described the impact of BPM on each of four success categories. Success categories 7 6 5 4 3 2 1 +30% 20% 10% 0% -10% -20% -30% Info-Tech interprets significant improvement or worsening to indicate a change of +/- 30%. Intermediate values are interpolated. “ Significantly improved” “ Had no impact” “ Significantly worsened” Averages are calculated based on answer frequencies in each success category.

54. The tool uses the following calculations to assess the dollar value of increments to the success factors. Info-Tech Research Group Benefit Dollar value Example Defect rates Increment to defect rate × cost of defects Reducing the defect rate on PCs from 99% to 98% is worth $1 if each defect costs the company $100. Frequency of service or product delays Increment to time to frequency of delays × cost of delays Reducing frequency of delays by 1% is worth $1 if each delay costs $100. Cycle time Value of product or service × increment to cycle time × time value of money Reducing cycle time for TPS reports is worth $1 if the time to produce the reports falls by 180 days, each report is worth $2, and the TVOM is 1%. Customization and flexibility Increment to time to rollout new product × profit from new product × time value of money + Impact to sales and brand value Reducing the time to roll out a new sneaker model by 10 days is worth $1 if the sneakers will generate $365 in profit and the time value of money is 1%. Plus there’s the additional sales that are gained due to early introduction.