An Introduction to

Business Process Management (BPM)

INTRODUCTION ...........................................................................................2
A BPM DEFINITION ......................................................................................3
ORGANIZATIONAL DRIVERS .........................................................................3
HISTORY.......................................................................................................4
DEVELOPING ORGANIZATIONAL MATURITY.................................................5
ENGAGING IN BPM INITIATIVES ...................................................................7
DEVELOPING A STRUCTURED APPROACH...................................................................................7
CHALLENGES & RISKS ..........................................................................................................8

BPM TECHNOLOGY ....................................................................................10

APPENDICES...............................................................................................12
ACRONYM LIST ................................................................................................................ 12
CASE STUDIES .................................................................................................................. 13
Hasbro Case Study ......................................................................................................... 13
Pulte Mortgage Case Study ........................................................................................... 13
Institute for Defense Analyses Case Study..................................................................... 14
Citibank Germany Case Study........................................................................................ 15
Ford & Mazda, Toyota & Chrysler Case Study ............................................................... 15
NOTES ........................................................................................................................... 16

© BPM Focus 2008 – All Rights Reserved 1/16

Introduction
In the current business climate, executives are under real pressure — pressure to avoid
commoditization and differentiate the firm’s offerings from those of the competition. There
is constant pressure to seek enhanced performance throughout the organization (do more
with less, more quickly), to make the firm more agile and easier to do business with, and yet
still ensure compliance and reduce operational risk.
Firms have to do this in an environment where rivals are evolving, innovating, and adapting
ever more quickly. At the same time, the market demands new forms of compliance,
transparency, and accountability on what firms do, how they act, and how decisions are
made through every level of the business. With this transparency comes increased risk. An
ever-watchful government, press, and investment community catch any misstep in
execution, with a potentially massive impact on the brand and/or the firm’s share price.
For example, not so long ago, a leading cell phone manufacturer dropped the ball on the
New Product Creation process (their product portfolio was criticized by analysts as the firm
missed the trend to clam-shell phones). The result was a multi-billion dollar drop in market
cap. While some might see this as a failure in marketing, ultimately it was a failure in the
business process and managerial oversight. In another example, the Chairman of one of the
world’s largest oil companies was more than just embarrassed when reporting that the
company had overstated its oil reserves. As a result of poor compliance processes, the
penalties imposed were significant (£17m to the UK regulators and $120m to the US SEC).
And they are not the only ones to suffer as a result of broken processes. In the 10 years
between 1993 and 2003, “more than one third of Fortune 1000 companies – only a fraction
of which were in volatile high technology industries – lost at least 60% of their value in a
single year.”i While all of these might not be attributable to bad business process
management, the majority reflect situations where managers lost the plot, took their eye off
the ball, or just failed to sense the evolving needs of customers and actions of competitors.
But it goes deeper than that. In the cutthroat business world of today, the dynamics of the
game are rapidly changing. Indeed, in the quicksand of corporate competition, doing nothing
is just not an option. Often, other players quickly copy any new market innovation. What is
needed is a reliable approach that delivers that capability to rapidly evolve, developing new
ways of doing things that are better, faster, and cheaper than rivals. Constantly reducing
operating costs is one side of the equation; increasing agility and responsiveness is the
other.
It is not just a competitive response; it is a way of achieving competitive advantage. If the
firm can develop the ability to create and optimize products and services much more quickly
and more cheaply than their competitors, then they have a way of ensuring that the
competitive advantage is built and sustained – an advantage that the competition just
cannot match.
At a personal level, even the most gifted Line Of Business (LOB) Manager is challenged by
directives such as how to reduce costs by 20 percent this year, or improve productivity by 30
percent; increase revenue by 25 percent through more effective customer service; or even,
how to integrate this new business into your operations (that we have just acquired). In a
wide variety of vertical markets, consolidation driven by M&A activity has caused real
problems when the firms have later tried to merge the operations of the firms.
And the CIO/CTO has some comparable challenges: How do you support the ever-evolving
needs of the business, enabling the firm to turn on a dime, yet keep technological
complexity, development costs, and time to market down to a minimum? How can we best
drive operational efficiency and yet enable rapid value innovation? How can we capture,
store, and access the context of decisions to support the slew of new compliance
regulations?

© BPM Focus 2008 – All Rights Reserved 2/16

Balancing all these seemingly conflicting objectives to maximize business performance is
extremely difficult. On the one hand, an endless search for cost reduction, while, on the
other hand, there is the need to deliver an adaptable and effective service infrastructure.
Business Process Management is the emerging management discipline that aims to alleviate
these sorts of issues.
Key Point – BPM provides a unifying mechanism that enables the organization and
the people within it to achieve their objectives.

A BPM Definition
At its heart, Business Process Management (BPM) is a management philosophy – a way of
running the organization that continually strives to enhance business performance. Through
a focus on the business processes of the firm, and behaviors of the individuals and systems
within it, BPM efforts drive organizational transformation.
While most organizations have a number of process related efforts under way, it is only
when these efforts are coordinated and given direction that one could say they have focused
on BPM as a management philosophy.
At the same time, BPM usually involves a set of technologies and an architectural approach
to designing how the form works. The enabling technologies that underpin BPM initiatives
(not essential but generally part of the mix) usually employ formal computer-based models
to drive the way in which work happens. These models encompass work delivery (ensuring it
gets to the right people and systems), while also providing them with the correct “context
for action”.
Key Point - BPM is about people, the way they work together (their business
processes) and the performance objectives that these processes underpin. At the
same time, it usually involves a suite of enabling technology that makes this vision a
reality. However, systems implementation is highly iterative (not waterfall) – change
happens in bite-sized chunks, layering on new capabilities and functionality bit-by-
bit rather than big bang deployments. It is a way of running the business (a mind
set) that continually drives performance improvement - a Journey, not a Destination.

Organizational Drivers
There are many reasons why firms get involved in BPM initiatives. In a recent review of
around 100 BPM case studies, we found that individual project objectives usually covered
several of the headings show in Figure 1.
Depending on the circumstances of the firm, some of these objectives were more important
than others. Enhancing business performance was the most common goal (lower cost and
faster cycle time). Becoming “Easy To Do Business With” (ETDBW) and more responsive to
customer demands was also seen as critical. When looking at the customer experience, firms
also wanted to integrate their disparate customer channels.
Others really wanted to focus on integrating their distinct systems and legacy applications,
re-using their existing IT assets and the embedded fragments of process within them. Some
wanted to outsource parts of the process or to choreograph the distribution of
responsibilities amongst suppliers and partners (or even to the customer). Most were
looking forward to the enhanced agility and lower operational risk. Indeed, in a Gartner
Group survey, Agility got the top score at 31%, where as support for regulatory compliance
was only 3%.

© BPM Focus 2008 – All Rights Reserved 3/16

 ETDBW
Customers
Responsive
Lower Risk

Lower Cost
Performance
Adaptable Faster
Agility
Nimble
Why BPM
Control
Outsource
Compliance Regulation
Off-shore Unbundle
Monitor
Distribute
Time To Market
Re-use IT Assets
Innovation Ideas
Develop New Apps Integration Share Best Practice
Customer Channels

Figure 1 – Organizational drivers of BPM initiatives

Regardless of the firm’s objectives, BPM systems had to work with existing systems and
approaches. In the case of Hasbro, that meant interoperating with the firm’s SAP system
(see Hasbro Case Study on page 13). Like most others, Hasbro set out to support the wider
business process that surrounded their transactional system.
Key Point – Different organizations have different goals and objectives. BPM
programs deliver against a range of Key Business Objectives.

History
BPM has its roots in a variety of places. Different strands of management thinking have
correctly defined the causal relationship between business processes, consistency and
predictability of results, customer satisfaction and, in the end, profits. A focus on the
business processes of the firm were at the heart of Six Sigma, Lean, TQM, and Workflow. The
same spotlight was central to Business Process Reengineering (BPR), although that particular
flavor got a lot of bad press as it had become associated with large-scale downsizing and lay-
offs.
In the parallel universe of technology, the term “Business Process Management” was given a
fresh lick of paint by a group of vendors and consultants in the early part of this century.
They formed the Business Process Management Initiative (BPMI.org) as a collaborative effort
break to define technology standards for computer-based models that could drive work
through the organization (rather than executable programs). Models were more amenable
to change and adaptation over time by business people. Moreover, the vision was that these
models would be more accessible and would not require armies of techies to make even the
most subtle change.
In turn, the wider business community became aware of the successes that were possible
and started to embrace the term more widely, favoring it over other acronyms. The stories
describing the benefits and the speed of development started to circulate. To some extent, a
few key vendors who were delivering highly successful were driving the hype.
But the projects, and the results achieved were real. Initiatives that previously would have
required vast unwieldy (and risky) project teams had moved within reach. For example, in
the UK Post Office the ‘Lost Package’ process was targeted for re-development. Using the
native Customer Relationship Management (CRM) environment (based on the Siebel
product suite), it would have taken 25 developers around 9 months to develop specific
customizations. Instead, they wrapped the existing CRM application with a modern BPM
Suite (see BPM Technology on page 10), 4 developers completed the entire exercise in 2

© BPM Focus 2008 – All Rights Reserved 4/16

weeks. Moreover, modifying any of the other functionality of the existing CRM system was
now technically trivial – all that was required was clear process modeling.

Six
Sigma
Process Thinking
Business
Process
Re-engineering
ITIL
eTOM Lean Sarbanes Oxley
SCOR Basel II

Business
Process
Scientific Management
Management Business Rules
Total ISO Workflow
Quality
Quality Management Service Oriented
Architecture
Thinking Automation

Figure 2 – BPM efforts provide a focus for organizational change initiatives (source Management
by Process)

Along the way, BPM had become a new way of thinking about business and technology. It
had become more than a fad driven by a few vendors with vested interests, it had become a
broadly accepted paradigm of managing the organization and driving it with technology that
could be changed at will, enabling organizational agility and delivering competitive
advantage.
As the executive sponsor at a leading UK bank exclaimed (while looking at Figure 2) – “we do
all of these things, but we don’t have any arrows.” He was talking to the need to coordinate
business process related efforts across the firm and engage in the development of a
cohesive strategy that builds process management into the heart of the culture and
operating model.
Key Point – Regardless of the name of the buzzword at the heart of Figure 2, there
will always be a need to understand your business processes. The challenge for
business leaders is to recognize BPM as “Transformational Journey” instead of a
“Transactional Outcome” or point of destination. This means getting to grips with
the culture and establishing a motto that puts “process at the heart of everything
we do.” There are no “silver bullets,” (although you could regard the BPM
Management Philosophy as a “silver gun”).

Developing Organizational Maturity

As industry leaders such as Toyota, Alcoa, Southwest Airlines, and Vanguard have
demonstrated, it is possible to tightly couple the process of doing work with the process of
learning to do it better. Operations are designed to reveal problems as they occur. When
they arise, they are addressed quickly, regardless of how trivial they are. If the solution to a
particular problem generates new insights, they are deployed systemically. And managers
constantly develop and encourage their subordinates to design, improve, and deploy such
improvements.ii
“It is what we think we know already that often prevents us from learning.”iii
To understand why some companies are more adept than others, it is useful to consider an
organization’s business process maturity (see Figure 3). Although there are alternative
models of business process maturity, they all share a common objective – making the
organization work better over time.

© BPM Focus 2008 – All Rights Reserved 5/16

Mature organizations, such as those promoted by Michael Hammer (of BPR fame), are able
to adapt quickly. Take Dell for example — its ability to cut unnecessary cost from the supply
chain is legendary. Another example is FedEx, which now knows so much about its delivery
process (logistics), that it can give a customer a choice of times to deliver a package.iv
Level 5
Change Management
Optimized

Level 4
Capability Management Culture of Optimization
Managed

Level 3
Business Management Process Measurement
Defined

Level 2
Work Unit Management Standard Process Definition
Repeatable

Level 1
Inconsistent Results Basic Management Control
Initial

Figure 3 - The Capability Maturity Model has been adapted into a Business Process
Maturity Model (BPMM) to explore organizational maturity around processes.v
An organization that does not have basic management controls in place to deliver products
on time or achieve predictable quality will struggle to maintain its customers. This
organization’s first challenge is to stabilize work processes at the local work group/team
level (moving to Level 2 in Figure 3). If there are 15 teams involved in an end-to-end process,
then each of them must be stable if the overall process chain is to work effectively. At this
level, the focus is on stabilizing the local work unit.
As an organization moves up the maturity ladder, it looks for the best practices (producing
the most consistent results) and standardizes work across the organization (Level 3). This
helps to achieve economies of scale and provides a common basis for measurement. This is
normally where a BPM suite is deployed, providing the necessary plumbing that enables the
firm to more easily change (although it could also be deployed to support departmental
processes at Level 2).
Process performance measurement usually starts at Level 2, but as the organization
progresses, the quality and value of those metrics improves exponentially. Key Performance
Indicators (KPIs) around a consistent set of processes are usually agreed upon by the time
Level 3 is attained. At Level 4, the capabilities of the process are known. They may not be
what management wants, but at least there is a statistical viewpoint that is realistic — it is
possible to identify the variance of cases against the desired metrics. With stable processes,
it becomes possible to see where surgery is required to address the competitive need and
identify the anticipated benefits. At Level 5, the KPI data is so good that it continually
highlights any areas where improvements are needed.
Key Points – Attempting to increase an organization’s Business Process Maturity is a
long-term goal. Different organizations will have various starting points for the
journey. For some, the challenge is to achieve basic efficiencies (by applying
standardized procedures). For others, it is about loosening up their procedures in
certain places, allowing them to respond more easily to customer demands or
competitive pressure — i.e. becoming more agile. Finally, it is worth realizing that
moving from any one level to the next normally involves learning to do things
differently, not necessarily doing more of was already the norm – getting to each
new level has its own special challenges.

© BPM Focus 2008 – All Rights Reserved 6/16

Engaging in BPM Initiatives
We have included a small selection of Case Studies in the Appendices on page 13. As a
general observation, it is hard to find a major organization that is not actively evaluating or
rolling out BPM. Some are taking an enterprise-wide perspective while others are seeing it as
a bottom up IT-led change program. The trick is always working out how to start these
initiatives.
For example, a Fortune 10 organization is currently assessing where to focus it energies.
They are engaged in an enterprise-wide assessment of where BPM and BPM Suites can add
value. The major cell phone manufacturer referred to earlier has been working on
establishing its BPM program for the last five years, focusing on the governance and
architectural issues first.
Others, such as the UK bank we referred to earlier, have started a BPM program jumping
straight into implementation mode, only later to discover that they were trying to solve the
wrong problem. Their scope and business engagement model was flawed. Indeed, many
firms have started out assuming that the technology side of the equation will solve their
organizational woes (i.e. another silver bullet).
Key Point – In our experience, a BPM initiative that is rooted in the IT organization
will always struggle to deliver long-term value. The associated benefits often fail to
materialize unless the body politic of the firm is fully engaged, which is difficult to do
when BPM is seen by the business as the latest “shiny new toy.”

Developing a Structured Approach

With BPM projects springing up in most firms, a robust BPM project capability is now a
competitive imperative. However, as people hear of the potential for substantial
productivity improvements and the opportunities for more nimble and adaptable business
operations, they are reminded of the hype that once surrounded ERP projects – only later to
see a negative press highlight failures. It was not just ERP projects – CRM, SCM, Six Sigma,
TQM – all of these techniques have a strong association with business processes, but have
attained only patchy success rates. With experiences such as these, some question whether
the benefits of BPM are real.

Second
Iteration

Initial
LOB
Rollout
First
Iteration

Business
Units
Business
Area 2

Business
Area 3

Time
Figure 4 - An iterative approach is key to long term success – Start small, Think Big, Iterate
Regardless of the amount of hype around BPM, the vast majority of BPM technology
projects are successful. According to Gartner, who recently surveyed BPM projects, 95% of
those questioned said that their BPM projects had been successful. Yet many firms are not

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choosing to promote their successes in order to avoid tipping off the competition –
preferring instead to keep the results a closely guarded secret. Moreover, where project
failure has occurred, it has usually been self-inflicted due to misguided or poor management
practices. The reality is that this potential outcome is entirely avoidable if you pay attention
to the details.
To ensure success, it is vitally important that the organization develop a structured and
repeatable BPM delivery methodology. At its heart, a methodology is a series of steps that, if
followed, will dramatically improve the chances of a successful outcome. Think of a
methodology as a recipe for success.
A part of this overall BPM delivery methodology is the “BPM Project Delivery Framework.”
This component of the BPM delivery methodology establishes the guidelines for those
tasked with managing and delivering individual BPM projects. It focuses on ensuring that
projects are appropriately rooted in the organization; that they are tackled in the right order;
that they are linked to defined business objectives; that they are scoped and resourced
appropriately; and that they make effective use of available BPM technology.
Key Points – The initial project should first focus on targeting a relatively simple,
achievable process with a clear business benefit (preferably delivered within 10
weeks). This allows the team to prove the viability of the BPM approach while
building skills and experience. Attempting to implement an extremely complex
process at the outset can be a route to disaster. Complexity derives from difficult
integration problems, or a politically charged implementation environment.
A structured BPM approach implies paying attention to much more than the
traditional “software development” project management methods. Indeed, some
aspects of these widely accepted approaches are wholly inappropriate when
considering highly iterative changes that involve people (for example, a robust
functional requirements specification is a complete waste of time).

Challenges & Risks

There are many potential missteps, especially when the IT department applies much of the
same thinking that created the current set of problems. These include:
• Moving to a “Center of Excellence” organizational form too early
The perceived wisdom (especially amongst the IT community) is that a CoE will
deliver enterprise-wide value immediately. However, experience shows that the
most important attribute of successful BPM initiatives is to deliver value early and
often – taking on relatively small projects that allow the team to build skills and
experience, while delivering a wow factor to the business. The net result is that
business suddenly gets behind the effort, pushing it along rather than in front,
blocking and resisting the change. The iterative aspect of a BPM program is easily
forgotten when a CoE adopted straight off. For example, at the large Cell Phone
manufacturer mentioned earlier, a CoE was created in 2002 as the best way of
approaching the problem. Yet, it was only later in 2007 that they finally started
getting to implement a BPM Suite. All of the intervening time was spent populating
a modeling repository with models (which quickly become out of date as soon as
part of the business is automated).
Key Point – A BPM CoE should be viewed as an evolutionary step that is probably
most appropriate at Level 3 BPM Maturity (see Figure 3).
• Building Momentum
To succeed in the long term, those charged with the initial project need to build
momentum, commitment and motivation to ensure that employees will engage on
the BPM journey ahead.

© BPM Focus 2008 – All Rights Reserved 8/16

 Key Point – Ensuring that the first project is successful is the most critical ingredient
for ongoing business buy-in. Otherwise the initiative can quickly suffer from a lack of
enthusiasm and disillusionment amongst users.
• Outsourced To IT
Too often, BPM projects are left to the IT department to “do” – IT has a history of
undertaking computerization projects and BPM is often seen as another IT project.
While the Business and IT might talk all the time, they often talk at each other, not
to each other.
Key Point - The Business itself must play a STRONG LEADERSHIP ROLE in ensuring
long term success. It cannot abrogate responsible for change, and is ultimately
responsible for success of the program.
• Business ownership of the BPM program
Make sure the battles are fought at the right levels, taking into account the overall
strategy and objectives of the firm. Alongside the governance structure, the firm
needs a set of guiding principles that encapsulate its philosophy and value
disciplines.
Key Point – All process owners need to ensure their processes are aligned with
organizational objectives. Executive agreement on principles and policies is a
prerequisite for success.
• Building The Business Case
Ignore the hype – ensure that, in the early days at least, expectations are not raised
unnecessarily. Link “softer” benefits to support for longer term Key Business
Objectives. Ensure that the team is able to succinctly and specifically state the
practical problems associated with the business domain. If that is not possible then
more work is necessary to identify the real priorities.
Key Point - “Show me the money” – The challenge is to become a “special project” in
the eyes of executives.
• Fundamental Metrics Re-assessment
Explore how to integrate the business relevant data (such as customer, or product
information) with information on cycle-time, resource utilization, etc. When
assessing KPIs, make sure that they support the underlying business objectives (the
firms KBOs). Ensure that measures reinforce the desired behavior in the employees.
Key Point – Too many metrics confuse the initiative (difficult to get alignment).
• Roadmap
Build a roadmap of the short, medium and long-term vision. Identify chunks of
functionality for successive iterations (helps everyone focus on the expected
delivery from this phase). Re-scope the roadmap on completion of each iteration.
Key Point – Expect 3-4 iterations at least before a phase of activity is deemed
complete
• Modeling
Remember that the emphasis is on understanding the process (not modeling
everything in sight). Use complementary modeling techniques that highlight
different perspectives, allowing people to see things differently (and help the
stakeholders step outside the box). Consider different approaches for process
Choreography, Orchestration, Capabilities, and States. Look for the “moments of
truth” (customer interactions), internal and partner role hand-offs. Don’t transform
the “As Is” model developed in the Understanding phase, build a new set of models

© BPM Focus 2008 – All Rights Reserved 9/16

 inside the BPM Suite. This helps to focus on the desired functionality for this phase
and removes the temptation to bend the rules.
Key Point - Informed people come up with innovations. Concentrate on the core 20-
30% in the first iteration (delivering the core value of the process). Problems can
occur if people decide to set out and capture all potential paths through a process,
all exceptions or all potential activities (resulting in “Analysis Paralysis”).
• Data and documents are the implementation details
They are “invented” mechanisms that were traditionally used to keep processes
coordinated. Look for ways of achieving the real goals of the process without that
mechanism of coordination.
Key Point – Removing these traditional mechanisms of coordination can drive
massive jumps in productivity.

BPM Technology
The BPM Technology space is ripe with confusion and misinformation. Each vendor puts
across their version of the bible as they have sought to differentiate themselves from the
crowd and put their own subtle spin on the needs of potential customers.
At the heart of all BPM technologies is the focus on doing things with models. Models are far
more accessible to business people and therefore lower the Total Cost of Ownership (TCO),
speed time to market and enhance Return on Investment (ROI).
BPM technology covers a number of overlapping categories of software with all vendors
claiming their importance in the mix. And given the way that competing vendors try to
position their products at the heart of the BPM debate, there is a lot of debate over what
really is, and is not part of the BPM technology mix.

Organizational
Modeling Process
Modeling
Workflow

Simulation
Document
Management

Business
BPM Suite Business Activity
Rules Monitoring (BAM)
Business
Intelligence (BI)
EAI
Solution
Frameworks

Enterprise Applications

Figure 5 - The multiple overlapping categories of BPM Software

In the early days, document management and routing of images gave rise to workflow.
These products separated out the process into a separate layer, enabling the model to drive
how work moved around the enterprise. Each vendor developed its own approach to
process modeling and incorporated that into their solution. This still left a major problem –
knitting together document routing with related information and third party applications
(i.e. there was still a lot of programming required). In the 1990s, this sort of aspect could
account for as much as 50-60% of the Total Cost of Ownership for a given workflow enabled
application.

© BPM Focus 2008 – All Rights Reserved 10/16

Coming from the other end of the technology spectrum were vendors focused on linking
systems together. This is often referred to as Enterprise Application Integration (EAI) with its
own set vendors with their proprietary methods for moving data from one system to
another. Still at the heart of all of these approaches was a need to embrace processes.
Following the more recent emergence of Web Service and use of Extensible Mark-up
Language (XML) as the lingua franca of systems integration, integration difficulties have now
eased considerably. Further levels of sophistication allow the inspection of third party
applications (introspection), wrapping them in Web Services to create scalable components
that centrally manage all interactions with back end systems (rather than being programmed
individually at the leaf nodes of the process as was common with 90’s style workflow).
Today, the integration aspects of a given problem probably account for no more than 10-
15% of the Total Cost of Ownership for a typical BPM application.
Some of these products have continued to evolve into Web Service Orchestration platforms,
using the Business Process Execution Language to string together Web Services (WS-BPEL).
Indeed, a whole new class of products has emerged focused on the WS-BPEL specification.
A subtly different group came from the Business Rules community. Rather than separating
out the processes into a separate layer, business rules vendors had provided tools to allow
the re-use of rules across a wide range of applications.
Over time, all of these vendors have converged on what we now call a BPM Suite. A whole
new set of vendors have now emerged with integrated product sets that deliver the entire
suite of functionality (usually referred to as a BPM Suite or BPMS).
Vendors have either built or embedded process and organizational modeling components
and have usually have embedded some sort of simulation capability. The plethora of
proprietary modeling approaches has, more recently, coalesced around a single standard
called Business Process Modeling Notation (BPMN).vi
Most vendors have also built their own process dashboards/analytics functionality to
provide management information on the work running through a given system. We are now
seeing vendors starting to partner with stand alone Business Activity Monitoring (BAM) and
Business Intelligence (BI) vendors to provide a more comprehensive view of overall business
performance.
Some vendors see BPM technology as a mechanism to deliver application solution
frameworks. Think of these as working applications that are deployed rapidly (to get a
customer application up and running quickly). Later, these applications can then be adapted
to meet the needs of the business.
The final trend that is worth touching on is the ability to deliver all of this functionality over
the web, “On Demand”. This is commonly referred to as Software as a Service (SaaS), which
when combined with BPM technology delivers some very special capabilities. From the
organization’s point of view, SaaS approaches provide a very low barrier to entry by enabling
the firm to get up and running immediately, without requiring complex infrastructure – all
that is needed is Internet access and Web browser for users.
Increasingly, vendors and end-user organizations are starting to explore the intersection of
these two concepts. The combination enables a whole new range of BPM usage (especially
process enabled collaboration between knowledge workers), yet it is also inappropriate for
other types of processes. Together, they are likely to facilitate a new era of rapid innovation
and disruptive change, yet at the same time bringing challenges in terms of security and
business model evolution.

© BPM Focus 2008 – All Rights Reserved 11/16

Appendices
Acronym List

BAM Business Activity Monitoring

BPM Business Process Management
BPMM Business Process Maturity Model
BPMN Business Process Modeling Notation
BPR Business Process Reengineering
CIO/CTO Chief Information Officer/Chief Technology Officer
CoE Center of Excellence
CRM Customer Relationship Management
EAI Enterprise Application Integration
ETDBW Easy To Do Business With
ERP Enterprise Resource Planning
eTOM enhanced Telecom Operations Map
ITIL Information Technology Infrastructure Library
KBOs Key Business Objectives
KPIs Key Performance Indicators
LOB Line Of Business
RFP Request For Proposal
ROI Return on Investment
SaaS Software as a Service
SCM Supply Chain Management
SCOR Supply-Chain Operations Reference
TCO Total Cost of Ownership
TQM Total Quality Management
WS-BPEL Business Process Execution Language
XML Extensible Mark-up Language

© BPM Focus 2008 – All Rights Reserved 12/16

Case Studies
Hasbro Case Study
Hasbro is a $3 billion manufacturer of widely recognized brand name toys. The firm now
outsources nearly all of its production to a growing list of third party manufacturers, most of
which are in the Far East. An SAP based ERP system captures orders and RFPs from
customers in the US, many of which have conditions attached (deliver by dates, etc). In the
past, orders were broken down and relayed to the appropriate suppliers for quotations and
responses using faxes, e-mail and phone calls. Replies were chased, collected and collated
before a response was provided to the customer. Managing this process was time-
consuming, involving the manual coordination of a broad array of vendors, manufacturers
and logistics firms. Around 200 people were involved in the Hong Kong office alone and the
typical cycle time was in excess of 2 weeks to respond to a customer-driven RFP.
To alleviate this problem, Hasbro built a BPM enabled portal (branded e-Connect) to interact
with its partners. SAP provided the transaction engine, but Hasbro needed BPM to manage
the business process that surrounded the transaction.
Since the introduction of e-Connect, the productivity of those 200 people in Hong Kong has
gone up by 3 times (it doubled in the first year). So has the business they are doing with Wal-
Mart, a major customer (also up by 3 times). Just as importantly, e-Connect has given
managers at Hasbro complete visibility and traceability on work in the system. Average cycle
time is now down to less than 24 hours.
But the benefits did not stop there. With the introduction of the USA PATRIOT Act came
changes to the level of reporting that was required on all shipments bound for the USA –
imports had to be tracked and reported at the box level (rather than at the container level as
it was previously). For a firm like Hasbro, that could have been a real problem. Driven by the
regulatory change, Hasbro could quickly modify the BPM system to update the Purchase
Order, Shipping and Logistics process models. They then focused on educating their third
party suppliers to work with the new customs labeling.
For Hasbro, this unanticipated benefit gave them real competitive advantage. They were
able to institute the new processes well before the regulatory change became mandatory.
So while competitors had their goods tied up on the docks (because they had failed to meet
the new standards imposed), Hasbro was able to clear customs quickly and efficiently, while
meeting increased levels of customer demand. Along the way, Hasbro has been through five
major releases of the e-Connect system in the first year of deployment. After four years, the
application has been through many, many revisions.

Pulte Mortgage Case Study

At Pulte Mortgage, they already understood their process relatively well. They set out to
change the model of customer service by becoming more proactive and concluding tasks
well before customers would reasonably expect completion. But without visibility into the
metrics of the process, it was difficult to spot opportunities for improvement. Through the
implementation of an automated case tracking application, managers could identify areas
where service improvements were possible. Indeed, it was only possible to identify
requirements once process metrics were gathered.
For example, as a result of the better visibility into the process, managers could monitor the
number of hours it took to push a case through to the point of offer. As the number of cases
rose in the queue awaiting approval, managers realized they could influence overall
performance of the process by lowering the credit-scoring threshold (where the system
automatically accepts mortgage applications). But as they reduced cycle time, the financial
risk would rise. This does not mean that managers were interested in re-configuring business

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rules in real time. Rather, as part of the manager’s dashboard user interface, the system
should now expose slider control mechanisms that enable this sort of control.
But this is a business judgment, trading off higher risk against more rapid response to
customers and hence, more business. As they come to understand the dynamics of these
decisions, they could then start to embed that enhanced understanding into a more dynamic
set of business rules that supported the decision (even down to suggesting the level of
automatic credit scoring approval).

Institute for Defense Analyses Case Study

The Institute for Defense Analyses (IDA) is a federally funded non-profit corporation that
assists the U.S. government by ensuring that major acquisitions are scientifically sound. As
such, it provides an independent testing and review facility for such organizations as the U.S.
Department of Defense (DoD) and the Department of Homeland Security (DHS).
For example, under the SAFETY Act (Support Anti-terrorism by Fostering Effective
Technologies), submissions must be independently reviewed and evaluated to test the
science behind them before recommendations are made to the DHS. This involves the use of
internal and external experts.
The process of gathering reviewers, assigning tasks, providing secure access to the relevant
information, and consolidating that into a final submission for DHS has many steps. At the
same time, it was essential that the documents produced and consumed are of “evidential
quality” — i.e. traceability is of paramount importance. Furthermore, security was important
with all documents accessed in the proper sequence; and only by the people associated with
a given role at that point in the process for a given case. Production of a final report was
always somewhat fraught, with a significant error rate that was unacceptable to
management.
Moreover, the core “reference” process changes regularly, while individual cases require
adaptation on a daily basis. From the perspective of an individual application (case), the
rules and sequence of evaluations change often, as do the formats used to convey results (to
DHS and the applicants). Some applications would require greater urgency; others may be
extended through further information gathering. Either way, the reference procedure could
only be thought of as a guide.
The problem was that each case handled by the agency was unique. They shared some
common characteristics (on how they should be handled), but the number, frequency, and
depth of review phases was not predictable in advance.
To handle this complex problem, the organization built a BPM enabled “Case Handling”
system. It enabled the careful management of the entire process, providing support for
changing both the core reference process and individual cases in flight (independently of
each other).
Prior to the implementation of a BPM support system, IDA employed four research
assistants who did nothing but assess status of the work at hand. Since implementation, two
of those research assistants now have become full-time research staff members carrying out
evaluations — i.e. their new jobs are creating value rather than simply assessing the status
of existing work. Another is focused on building a growing repertoire of suitable subject
matter experts, leaving one individual to carry out the work that originally took four people.
And her work has fundamentally changed to concentrate on the way work is carried out,
leaving her to study the process and analyze it for management.
The IDA manager responsible put it like this: “We are congressionally mandated to meet
timeframes, and now we are doing it with a lot less confusion and frenetic stress. There is no
last-minute panic to pull it all together.”

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Citibank Germany Case Study
In 2002 the consumer division of a Citibank Germany embarked upon the “industrialization”
of their organization. They adopted the term “industrialization” to align it with the thinking
of the manufacturing sector.
Before the change program began, transactions were originally processed in their 300
branches as well as in 3 consolidated back-offices. The organization decided to amalgamate
all back-office processing into one centre, comprising 1,950 staff, 900 of which are on the
telephones (call centers, collections and telemarketing, etc). A large segment of the
employees worked part-time, a trend that Citibank wanted to increase. Citibank receive
about 9m letters per annum which are scanned and moved around the organization. A
modern BPMS supports this work.
Initially, the initiative stalled as the cultural issue was not addressed. In the end, senior
managers took a very courageous decision – they linked the ability to achieve promotion in
the firm to certification from a 2-week BPM training course. To get on the course, individuals
had to get their managers approval for a project that would deliver at least ½ an FTE in
additional capacity. On competing the course, the individual was expected to run that
project. When the project was deemed to have ended (according to the original business
case), the that amount of revenue was removed from budgets. In this way, management
finally got everyone’s attention.
In summary, the results achieved in first 3.5 years were:
• Expense to sales ratio has decreased from approximately 80% to 38%.
• Booz Allen completed a study of German bank branches and determined that
branch staff spent about 19% of their time with customers. With the removal of the
back-office processing, Citibank’s branch staff are now spending over 70% of their
time with customers.
• Errors reduced significantly, from 25% - 30% to 3% - 5%, which is considered an
acceptable level.
• Surveys showed that both customer & staff satisfaction levels increased
significantly.

Ford & Mazda, Toyota & Chrysler Case Study

In the frothy days of Business Process Reengineering, we heard all about Ford and their
$100m invoicing system. The intention was to support a staff reduction in the Accounts
office from 500 to 400 people. Then someone involved in the investment team at Ford
noticed that Mazda had only fifteen people in their Accounts function (Ford had just
invested in Mazda). Taking into account the economies of scale and relative size of Mazda,
they should have had around 75 people. Upon further investigation it was discovered that
instead of paying on invoice, the Receiving Department at Mazda checked the delivery
against a Purchase Order. If all was well, then the payment was processed (i.e. without an
invoice). Ford applied the same process to their situation, refined their purchasing processes
and by the early 1990s had reduced their Accounts staff to just 125. And while they were at
it, they saved the $100m earmarked for the new Invoicing System.
But the story goes on-although it becomes more anecdotal. Egged on by an army of
consultants and numerous HBR/Sloan articles, the rest of the US auto industry followed suit-
they realized they could largely do without invoices. So, when one of the major US auto
manufacturers went to visit Toyota, the benchmarking team was amazed to find that they
only had six people in their accounts department. Somewhat befuddled, they asked how it
was possible that such a major business could have so few people in their accounts function.
The answer; even simpler. Instead of getting very good at purchasing (i.e. having to create
more effective purchase orders that were matched with goods received), they paid their

© BPM Focus 2008 – All Rights Reserved 15/16

suppliers when they made cars. Every car had one steering wheel, a given number of doors,
a sunroof, etc. It was up to the supplier to ensure that suitable supplies of quality goods
were present at the plant. Sure, they now had to manage their suppliers more effectively
and provide them with information access (stocks available, forward orders, etc.), but they
had found that they did not need to manage specific orders or invoices.
The moral of this story-to achieve quantum leaps in business performance, concentrate on
finding ways of doing what is needed, but without the traditional mechanisms of
coordination. Do not follow the paper trail and then automate it. Think carefully about why
those coordination mechanisms are needed in the first place and what would happen if they
were removed.

Notes
i
From “Countering the Biggest Risk of All,” Slywotzky & Drizk, Harvard Business Review, April 2005
ii
“Fixing Healthcare From the Inside, Today” by Steven J. Spear, HBR – Sept 2005.
iii
French Physiologist, Claude Bernard quoted in “Funding Growth in an Age of Austerity” by Gary Hamel and Gary
Getz, HBR July 2004.
iv
“Surface Expedite Network is a time-definite service utilizing the operational excellence of FedEx Freight and the
customer service expertise of FedEx Custom Critical … choose the hour the shipment must deliver by (by 2 p.m., for
example) or a one-hour delivery window (i.e. between 2 and 3 p.m.)” www.fedex.com.
v
I am indebted to Dr. John Alden and Bill Curtis of Capability Management for helping me to clarify my thinking in
this area during a recent BPMI-Steering Committee meeting at the OMG. Alden and Curtis are co-authors of the BP
Maturity Model (currently going through a standardization process at the OMG).
vi
Originally, BPMN was developed by a group of vendors involved in the Business Process Management Initiative
(BPMI.org). This has since merged with the Object Management Group (www.omg.org) who continue to manage
the ongoing development and support of the standard.

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