No process management without monitoring

When companies restructure their business processes, they are only halfway there. Only those companies that measure the associated changes can also demonstrate their success and systematically eliminate constraining factors.

In his keynote speech at Process World, the user conference held by IDS Scheer, the founder of the company and chairman of the supervisory board August-Wilhelm Scheer struck an optimistic note. "The idea of business process optimisation has arrived in companies," was his message and the presence of some 900 delegates at the conference in Vienna seems to have proved him right.

However, many companies find that the modelling and documentation of improved business processes is no longer satisfactory in itself. Instead of allowing the process maps they have developed to gather dust in filing cabinets, they are looking for ways of measuring the success of the actions derived from them and quickly detecting disturbances in the process chain.

"We want to detect an increase in open orders immediately and not have to wait four weeks for a report about them," was how Raimund Browarzik, Head of Information Management UTat Henkel KGaA, summed it up. He was reporting on a project for monitoring business processes (known as "business process monitoring"). The group wanted to use it to bring the consequences of a large SAP-R/3-project for its Heidelberg site and the French subsidiaries under control.

According to Browarzik, Henkel had experienced a brief dip in efficiency each time after introducing SAP. "In new enterprise resource planning systems the advantages are not obvious, you have to work actively and intensively on it."

In 2004 in the project mentioned, problems included difficulties in controlling processes using standard indices, as the amounts of data involved had become too large.

In order to remedy this, Browarzik, who was disparaging about IDS Scheer`s "Aris" process modelling tool, introduced another tool, "Process Performance Manager" (PPM) developed by the same Saarbr"ucken company, to monitor individual processes. This showed the current state of processes such as document flow instead of giving representations of how they should look under ideal conditions. The tool extracts data and indices from various points in the SD (Sales & Distribution) module of SAP and allows them to be evaluated. A graphical interface is used to generate controlling cockpits that can act as an early warning system.

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Browarzik was satisfied with the experiments and announced that the process would also be introduced for material management and monitoring the master data system:

"We want to make PPM the central monitoring tool together with SAP Business Warehouse (BW)."

Although the introduction of ERP systems should ideally give an improved picture of processes in a company, the dips in efficiency shown by Browarzik do not seem to be in the least exceptional. Like Henkel, BASF also fought a running battle with the consequences of the large-scale introduction of SAP after the group had implemented the software at its largest and most important site in Ludwigshafen. The internal supply chains had to contend with problems, process quality could not be measured and the number of customer complaints increased. Altogether, deliveries were less reliable than before introducing ERP. The most important reason for action was that the group was making losses on the system, organisation and training.

BASF therefore created a staff department for business process optimisation. Its head, Christian Gumpinger, began by minutely examining the core processes and decided, during discussions with all the departments concerned, to start by tackling the process from receipt of order to invoicing. In April last year Gumpinger`s team looked at these processes in two very different operating units, not including sales and production planning. As a first step, his team interviewed more than 40 employees working on the process, came up with a series of disturbing factors and investigated their effects.

Lastly Gumpinger`s team analysed the potential for optimisation and which efforts were associated with process changes in the individual units. In this way they were able to list factors in order of significance and frequency. It was also felt worthwhile to make the most important disturbing factors measurable. With this approach, Gumpinger isolated three critical areas that were causing a large number of the problems. BASF developed 60 remedial actions and the 20 most important of these were implemented. To check their effectiveness, BASF also used PPM. Since the successful completion of the project the group has been using the tool to keep an eye on the critical influencing factors and make further improvements. The procedures described, with some adaptations, are also suitable for improving processes within IT departments, as was shown by the paper given by Roman Studenic, Factory Systems Manager at John Deere, manufacturers of agricultural machinery in Mannheim.

Studenic gave a good shake-up to the processes in the IT department in order to present it more effectively and position it as the internal service provider. He referred to the Best Practices of the Information Technology Infrastructure Library (Itil) for the new setup. Studenic used the Aris toolset to help with the process design of the new IT strategy and uses "Aris PPM" for IT process control. With this Studenic monitors the characteristics of important processes, for example the time taken to deal with service questions or the number of contacts with departments that are needed to solve a problem. PPM fetches the data for these evaluations from the Hewlett-Packard "Service Desk" help-desk tool used at John Deere.

He is pleased to say: "In the areas of incident management, service management, request management, complaint management and problem management we have been able to achieve considerable improvements through monitoring with PPM."

The procedure has also been supported by drawing up suitable service level agreements. Moreover, Studenic has introduced an IT Balanced Scorecard for the management of the IT department. This enables a good comparison between planning and the current state of the process changes that the IT department is aiming for.

S E P E R AT E P R I N T

Project type: Introduction of Process Performance Management systems.

Sector: Manufacturing industry and IT departments.

Current status: Running productively at Henkel, BASF and John Deere.

Products: Aris-Toolset, Aris-Process-Performance-Manager

Service provider: IDS Scheer and Implementation Partners.

Result: Process changes can be evaluated. Further potential improvements can proceed from this.

Want to hear more about ARIS and PPM? Join us at the annual ProcessDay 2004 on 6 September 2004 in Cape Town and 8 September 2004 at Caesars Gauteng. Presentations by Prof Scheer and other IDS Scheer specialists on PPM and Risk Management. More detail and online registration: http://www.cpi.co.za