WebSphere Process Improvement Workshop Overview and preparation requirements

1. WebSphereProcess Improvement WorkshopOverview and preparation requirements Hans Skalle Workshop Facilitator 612-220-1880, hskalle@us.ibm.com

2. WebSphere Process Improvement Workshop Topics • Background – Why process improvement? • The WebSphere Process Improvement Workshop (PIW) – Overview • Sample Results • Preparation Requirements 2

3. WebSphere Process Improvement Workshop Topics • Background – Why business process management? • Business process overview • Introduction to Business Services • IBM’s Services Oriented Architecture (SOA) Lifecycle for continuous improvement • IBM’s WebSphere BPM suite • The WebSphere Process Improvement Workshop (PIW) – Overview • Sample Results • Preparation Requirements 3

4. Business processes… • Coordinated chains of activities producing business value and results • Typically consist of: • Human activities (Human Workflow) • Business system activities (such as ERP, or CRM,…) • Combinations of human and system activities • Define how the business runs at an operational level • May be hidden or embedded: • In the organization and culture of a company • In the business systems of a company • Are often poorly understood • Reactively managed, improved

5. Companies that have implemented Business Process Monitoring systems are seeing results… “Three-quarters of 160 companies surveyed recently believe they are flying their business processes ‘blind and without instruments.’ This lack of visibility, often due to old application software, is inhibiting all levels of management from seeing bottlenecks in such critical processes as capital risk management, claims tracking, compliance, inventory management, and customer service.” • An average 9% improvement in revenues • A median 12% decrease in process-related expenses • A 10% return on assets (ROA) • An 18% return on investment (ROI) • 94% are moderately or very pleased with the overall improvement Business Process Monitoring has delivered Source: AberdeenGroup, The Business Process Management Benchmark Report, October 2006

6. Pressure to grow, innovate and drive costs down – Business Process Management (BPM) is critical According to Gartner, pressure is coming from global competition, especially around price, which is commoditizing many businesses, and compliance with regulatory requirements such as the Sarbanes-Oxley Act. “To meet these challenges, organizations must find ways to better manage their business processes — that is, the ways in which they operate.” –Gartner's Position on Business Process Management, 2006 Two factors are now enabling BPM: • The advance of BPM technology (BPM Suites) and technology standards for Services Oriented Architectures (SOA), XML and Web services. • The spread of Six Sigma and other process improvement methods, and the availability of process modeling tools for business analysts, in addition to architects and IT professionals.

7. Business process logic will no longer be deeply embedded in application code, where it is locked away and expensive to change. Instead, process logic will exist in the form of high value business services that are reusable. Processes using these services will be much more flexible and cheaper to maintain over time, allowing businesses to achieve dramatic results in responsiveness, cost effectiveness and profitability. Flexible, componentized business processes Service Components are reusable building blocks Flexibility through Business Services

8. Customer self-service Examples: Credit authorization Corporate SALES SUPPLY CHAIN FINANCE OTC Div A Orders Div B Billing CUSTOMER A/R Div C Reusable Business Services Improving performance – Service-driven realignment Component reuse within and across processes drives costs down even more over time As we create the future-state model we’ll look for opportunities to use Business Services to improve performance

9. IBM’s Services Oriented Architecture (SOA) framework for continuous improvement • Multi-dimensional framework designed to enable and sustain continued high performance • Managed interactions between people, processes and information • Model-driven implementation cycle • Governance framework supported by Registry and Repository • Enables the gap between business and technical design to be bridged • The WebSphere suite includes tools to measure and report process performance, supporting data-driven process management

10. Supporting continuous improvement and innovationThe WebSphere BPM suite WebSphere Process Server WebSphere Integration Developer Flexible deployment of business processes, making plug-and-play of components a reality Easy-to-use graphical tools to simplify and speed the assembly of composite applications WebSphere Business Modeler Simple to use process modeling for the business analyst to help maximize process and business resource re-use WebSphere Business Monitor Real-time visibility into process performance enabling process intervention and continuous improvement “IBM has the broadest SOA platform…” Source: Forrester Research, Dec 21, 2005

11. WebSphere Process Improvement Workshop Kickoff Topics • Background – Why business process management? • The WebSphere Process Improvement Workshop (PIW) – Overview • Activities and scope • The PIW process • Sample results • Preparation Requirements 11

12. WebSphere PIW Goals: • Demonstrate Modeler value, capability • Demonstrate five-step improvement method Scope: • Business (vs. technical) modeling • Sub-process (limited to +/- 20 tasks) Simple Complex On-site: Elapsed: 2-3 days +/-1 week IBM Process Improvement Workshop (PIW) – Scope Consulting Services Engagement

13. Current state process Future state process • Bottlenecks and constraints • Rework, errors and exceptions • Missing, incomplete information • Fragmented processes held together through spreadsheets, re-keying, informal workarounds • Numerous approvals and audits • Sequential activities creating delays • Paper-based processes • Lack of measures, performance indicators • Decisions based on feelings vs. facts • Processes that are too slow, too costly to be competitive • Streamlined with automated workflow • Exception-based including alerts and escalation (out of bounds conditions and time triggered) • Improved access to accurate information through integration • Rules-driven approvals and routing • Use of managed parallel activities • Dashboard monitoring and decision-making based on real-time Key Performance Indicators, results • Improved ability to respond to and implement required regulatory controls • Reusable business services Improved process What to look for in the current and future states

14. Associated with a key, meaningful initiative Greater effort Reengineering project Scope of PIW Lower effort Simulation may be used to assist with the calculation of payback and positioning Payback Lower, non-strategic value Higher strategic value, linked to key initiative Initiative A Initiative B Initiative C Initiative D Placing the scope of the PIW on the prioritization and evaluation matrix

15. Implement and Manage Define and Align Objectives Cycle of Improvement Model Current State and Gather Data Model Future State, Evaluate Options Assess and Analyze WebSphere Business Modeler – Five steps to continuous process improvement • Develop pilot and implementation plans • Create measures • Assign technical attributes • Implement, Monitor performance • Link to core process and/or key initiative • Define improvement objective (e.g. “Reduce process cycle time by…”) • Model exception paths including required corrective action • Gather and load cost and time (duration) data • Look for opportunities to automate (e.g. workflow, integration vs. re-keying) • Model alternatives and rank by payback (use a simple matrix) • Gather feedback on the proposed process • Classify activities (e.g. value add vs. rework) • Develop a simulation test plan • Simulate “As-Is” process to identify bottlenecks and high cost areas • Prioritize improvement opportunities SOA: The Key to Business Flexibility 15

16. You are here WebSphere Process Improvement Workshop process Pre-Workshop (approx 1 – 2 wks) Onsite Workshop Post Workshop IBM Representative Discuss workshop value, process and determine dates Prepare Executive presentation, next steps summary Workshop Facilitator Execute next steps Identify process, set expectations regarding scope IBM Sales Representative Customer Workshop Facilitator 2 to 3 Days Customer LOB SMEs Provide documentation (Visio, procedures, forms, input sheet) • Possible next steps: • Proof of Technology lab • Additional workshop(s) • Software Investment Conduct Process Improvement Workshop Workshop Facilitator Create draft current-state model, project tree, Exec ppt Workshop Facilitator Customer Representatives

17. Day One: Establish boundaries, model and/or review the current state Conduct Process Improvement Workshop – Day One Day One Current State Deliver kickoff presentation to level- set expectations Approx 2 Hours Review current state and agree on/refine scope Approx 2 Hours Model current state using WebSphere Business Modeler Approx 4 Hours

18. Day Two Future State Review current state and brainstorm future-state improvements Approx 1 Hours Day Two: Brainstorm improvements, model the future state Create future-state process model Approx 4 Hours Compare current- and future-state models (simulation) Approx 2 Hours Conduct Process Improvement Workshop – Day Two Day One Current State Deliver kickoff presentation to level set expectations Approx 2 Hours Review current state and agree on/refine scope Approx 2 Hours Model current state using WebSphere Business Modeler Approx 4 Hours

19. Day One Day Two Day Three Current State Future State Next Steps Review current state and brainstorm future-state improvements Package results, create Executive Presentation Deliver kickoff presentation to level set expectations Approx 1 Hours Approx 4 Hours Approx 2 Hours Create future-state process model Deliver Executive Presentation Review current state and agree on/refine scope Approx 4 Hours Approx 2 Hours Approx 2 Hours Compare current- and future-state models (simulation) Model current state using WebSphere Business Modeler Agree on next steps Approx 4 Hours Approx 1 Hour Approx 4 Hours Conduct Process Improvement Workshop – Day Three

20. WebSphere Process Improvement Workshop Kickoff Topics • Background – Why business process management? • The WebSphere Process Improvement Workshop (PIW) – Overview • Sample Results • Preparation Requirements 20

21. Sample ResultsCustomer background • Had used Visio to document processes • Inconsistent from modeler to modeler • No ability to simulate • Some modeling standards in place • Various symbols used for Task attributes • Six Sigma company • First major Six Sigma initiative • Worked with a newly formed Six Sigma project team • User of Six Sigma’s Design, Measure, Analyze, Improve, Control (DMAIC) methodology • Very talented team • Strong engineering and manufacturing backgrounds • Experienced with statistical process analysis

22. Sample ResultsPIW Activities • Pre-workshop Activities • Customer provided VISIO diagrams, documentation • Imported prior to the on-site workshop • On-site Activities • Refined and validated current state process flow • Resolved VISIO symbols that did not map to BPML constructs • Added model attributes including time and cost • Conducted simulation and analysis using basic techniques • Analyzed standard time and cost reports • Identified problem areas, constraints • Identified improvements based on problem areas • Created the proposed future state process model • Ran simulations and conducted comparative analysis • Analyzed standard time and cost reports • Analyzed Comparative reports • Created and delivered executive presentation to sponsors

23. Model was completed by resolving and adding required BPMN components Process Improvement Workshop – Visio import Minor Visio clean-up was required for import

24. Process Improvement Workshop –attributes added

25. Process Improvement Workshop – current state simulation

26. Process Improvement Workshop – evaluated improvement options • Potential Areas of Improvement • Consolidate / Eliminate Tasks • Maximize the use of Parallel paths • Increase probability of most desirable paths • Reduce task durations • Modify resource requirements • Automate tasks or sub-processes • Implemented in the To-Be model

27. Process Improvement Workshop – Process Comparison

28. WebSphere Process Improvement Workshop Kickoff Topics • Background – Why business process management? • The WebSphere Process Improvement Workshop (PIW) – Overview • Sample Results • Preparation Requirements 28

29. Prep Work (checkpoint calls as required) Kickoff Call Workshop (2-3 days) Deliver Executive Presentation* Week 1 Week 2 Week 3 Week 4 Complete Current- and Future-state Process Models Complete Data Collection *Note: Executive Presentation typically delivered on the last day of the workshop or shortly after. Typical Process Improvement Workshop Timeline

30. Pre-workshop preparation requirements and timeline

31. Process Improvement Workshop Resource Involvement Customer • Executive Sponsor – interested in the outcome, attends the PIW Kickoff and final Executive presentation • Client Lead - coordinates customer activities, active in preparation of executive presentation • Process SMEs – familiar with business process, conducts data collection for one simple business process, participates in workshop • Key Stakeholders – interested in the outcome, attends the PIW Kickoff and final Executive presentation, influences decision to move forward IBM • WebSphere Sales Rep – opportunity owner and manages client relationship • PIW Lead – manages PIW process and workshop, delivers PIW Executive Presentation (may also be Modeling Specialist) • PIW Modeling Specialist – assists client with data collection and selection of one simple business process, facilitates discussion and creates As Is and To Be models during workshop, conducts demo during Executive Presentation

32. Backup

33. Insurance Industry “New life policy” process – example • Insurance company, high cost, slow turn around for new business life policies • Paper based process, dependent on the resources constrained agents • Expensive High Underwriter involvement • Very Static and prone to losing documentation • Modeled future-state process • Added portal at the front-end • Converted paper requests to electronic format • Process streamlined and automated • Business Value • The weighted average cost for this process • As-Is $16.75 To-Be $14.72 • The duration for the process • As-Is 7 hours To-Be 3.5 hours

34. Cross Industry Customer Record Update Process – example • Management is concerned about the accuracy and timeliness of the process and the eventual impact to business productivity • Sales, credit, and customer service use separate applications, using manual entry • Improved process • WebSphere Process Server and adapters to automatically detect new customers in SAP R/3, new data is sent to the appropriate applications, including the supplier • Business Value • Information is available in real-time and is accurate • The weighted average cost for this process: • Current: $44  Future: $22 • The duration for the process: • Current: 4 hours  Future: 4 minutes

35. A three-day educational and problem-solving work sessionduring which wedocument a current business process, define a high level technology-enabled alternative process, and compare the two using WebSphere Modeler’s advanced simulation capability WebSphere Process Improvement Workshop Activities • Establish process boundaries and link the process to business goals and benefits • Model the activities that make up the current-state process including decisions, failure points and exception paths • Document inputs/outputs, resources, roles, along with duration and revenue/cost values. • Identify changes to the process that would result in an improved, workflow- and/or services-enabled alternative and model the future-state process • Develop simulation test cases and perform static and dynamic analysis • Discuss Key Performance Indicators (KPIs) and implementation attributes Deliverables • Current- and future-state simulation results, process diagrams Participants • Customer: LOB executive sponsor, business process SMEs, IT architects • IBM: Process modeling experts, technology specialists

36. 1 5 (Pilot) Implement and Manage Define Requirements and Align Objectives 4 2 New Process Design Cycle Create Process Model(s) and Test with Simulation Establish Key Measures, Examine Best Practices 3 Goal: Use the building blocks – global tasks, sub-processes, services – to design and “wire together” new processes Evaluate Building Blocks for Reuse WebSphere Business Modeler – Five steps to New process design SOA: The Key to Business Flexibility 36

37. Business Process Management combines business expertise and enabling software Business Process Management is a differentiating business capability combining software capabilitiesandbusiness expertise… through people, systems, and information to accelerate process improvements and facilitate business innovation Business Process Management • Expertise that Delivers BPM • Process Knowledge • Industry Methods and Models • Business consulting expertise • Software that Enables BPM • Tools, Rules • Dashboard, Forms • Repositories