Building better business processes?

Business process simulation and modelling is not only an excellent starting point for implementing enterprise-wide IT systems (ERP), it’s also a relatively untapped tool for assisting with reorganising company and production facilities during times of enforced or elective change, and indeed for ongoing optimisation – of both manufacturing and business operations. In fact, increasingly graphical systems are now being launched not only for initial organisational mapping as an aid to ERP system selection and then implementation, but also expressly as tools for continuous improvement. However, finding systems that are generalised enough and people skilled enough to use them seems to be a problem. While most leading ERP vendors offer modelling tools and methodologies, virtually all are vendor-specific, and tend to be wheeled out either to help sell the business case, highlighting supposed potential cost and production savings, or to do their mapping once the new ERP contract or upgrade has been agreed. Or both. And we shouldn’t knock these: largely pre-configured ‘best practice’ vertical industry sector business process templates are classically now embedded to help expedite implementation, rollout and ultimately faster ROI (return on investment). These do work, and work well. But for the future it may well be worth watching out for those that can do rather more. And then understanding their strengths and limitations and what’s required up front is key. For example, although there are now a few vendor- and application-independent business process modelling systems, none will automatically compare potential performance of competing IT systems for you. Then again, perhaps unsurprisingly, consultants are likely to recommend their services, at least initially, ahead of such tools, even though their programmes typically take a month or more, while suppliers like Intellicorp with LiveModel claim their software can generate a graphical overview within a couple of days. But we would be foolish to dismiss the consultants. KPMG’s Graham Steven insists, quite rightly, “Big benefits come from analysing how to make fundamental changes in a business, from process and people to resources and future potential output.” He maintains it’s vital to understand all the constraints and define the existing and potential future company and its business environment before imposing major change. “Unfortunately, many businesses buy ERP systems on an act of faith. Business process modelling can take out the guesswork. But first you have to understand how you want to run the business, the key processes and how they will change the way people work. This also demands careful change management.” But business strategy first Fact is, for effective business mapping, managers should ask themselves the following questions. What is their business strategy over the next five years? What markets, products and channels will be involved? What are likely to be key success factors? For example, do you envisage becoming a low cost producer with a stable but low cost, high volume line, or a high-end service provider demanding constant innovation? KPMG maintains that this entails defining several processes from the top. They include: order fulfilment, manufacturing, supply and demand planning, new product introduction, materials management, knowledge management, customer engagement, financial accounting and resources management. Steven asserts, “It is important not to be too prescriptive about the software tools until you have clarity about how you want to run the business. Then process modelling tools can be used to examine key functional requirements.” He believes the reason so many major IT implementations fail has little to do with any significant differences between the alternative ERP solutions that would-be users might have chosen. “[It is] variations in how these are implemented for process change and change management,” he says. Once the functional requirements are understood and the criteria for selection defined, only then can software be identified – and then the benefits of business process modelling come from working in a structured fashion. All that said, let’s look more closely at some of the tools as seen through the eyes of the vendors – and observe lessons on the way. ERP vendor SSA GT offers Process Manager, targeted primarily at BPCS users, but also for others, and designed to define and depict key functions, processes and resources graphically. The firm’s development principal Beh Seng Hua explains that once organisation is defined, ‘event-based models’ can be developed describing end-to-end response to anything. Each has a process workflow with an ‘ownership function’, so the organisation can understand where responsibilities lie – and it is this, he says, that helps suggest how a company should reorganise. Also, each process is assigned a ‘performing function’, so cross-functional relationships can be identified. Even so, Seng Hua warns, “People often get fixated on how a picture looks without thinking what the process and workflows involve.” He insists that for effective implementation a company must be committed to a process-centric way of working. “This is a cultural issue, requiring the breakdown of traditional barriers between departments,” he says. At one of its users – consumer packaging firm Huhtamaki, which has several UK sites – use of browsers on their desktop PCs allowed people at all levels to examine new business models and roles, and provided formal mechanisms for improvements. “The processes aren’t just stored away, but become part of everybody’s way of thinking,” says Seng Hua. SSA GT is far from alone, although each of the vendors has gone a slightly different way. SAP ‘s R/3 ERP gets its modelling package from its partnerships with Intellicorp, which offers the graphical LiveModel modeller, and IDS Scheer, with its Aris tool. Live Model can help kick-start new SAP R/3 ERP applications and integration with other applications and systems. Chris Trueman, a vice president with Intellicorp, maintains that it helps organisations implement their ERP systems more rapidly, and facilitates later upgrade projects because it covers business processes, the systems and the people. But Trueman concedes, “There is no panacea for all process problems that may arise in an organisation. People need to do a cost benefit analysis of key operations; then they can use a system like Intellicorp’s to manage the ERP lifecycle, accelerating implementation, which translates into cost savings.” One size doesn’t fit all And in fact there are several tools and consultative processes. SAP business implementation consultants Leon Sadler and Bob Thomas look at it thus. They regularly take management teams through a three-tier business modelling process. First there is ‘visioning’ to determine an organisation’s business strategy. “A lot of organisations come to us with a fixed view of what they want, but visioning helps open their eyes to the art of the possible,” says Thomas. The next level involves translating strategy into action, with the ROI business case and an outline programme for delivery. For this, SAP employs a variety of tools including an ‘e-business Case Builder’, which is free to customers and partners over SAPnet. SAP also uses ‘collaborative business maps’ and ‘collaborative solution maps’, which offer graphical representations. Finally, at the third tier there is a chance to review suggestions prior to actual implementation. Modelling this way takes about one month – and SAP, like SSA GT, also offers ‘best practice’ processes: 600 in all, for aerospace, defence, automotive and so on which, it claims, speed implementation and reduce costs by 50—60%. Meanwhile, IDS Scheer’s Aris modeller covers SAP, legacy ERP and manual systems. Users include BAE Systems, BOC and Shell, and product director Ralph Thompson says you can run the suite not only for modelling, as above, but also for simulation, costing, change management, gap analysis and process optimisation right out to balanced scorecard and checking of key performance indicators. Says Thompson: “We mainly help large organisations understand what they do, formulate generic processes and avoid duplication.” Moving on, mid tier ERP developer Geac has its Process.Connect modeller, geared to the middle manufacturing market’s needs, but again covering everything from business process understanding and development, to workflows, departmental mapping, cycle time analysis and costs and so forth for its System 21 ERP. And there’s Geac’s @ctive Modeller background. Marketing director Alistair Middleton emphasises the tool’s ability to help companies change. “Many of our customers service large organisations like Tesco and Safeways, so fast response is vital. What’s more, our Process.Connect software is constantly looking for problems or events. As soon as these happen, there are alerts … so processes run faster and customer service improves.” And the list goes on. JD Edwards, for example, offers Provision with a pre-software-selection ‘Value Assessment’ tool which loads users’ key operational data and compares KPIs and ratios with industry average or best-in-class to identify opportunities. Then there’s ‘Value Calculator’ which puts sector-specific numbers in place – and so on. Nick Rawls, self styled ‘collaborative-commerce evangelist’ makes the point that the new supply chain aware environment will require a more collaborative approach. “Few companies have yet taken the extended supply chain into account in their business process modelling. This is new territory and requires modelling across multiple platforms with multiple players, and new teams internally and externally.” We also spoke to Intentia, Oracle and Baan, all of which sport similar systems able to look after everything from pre-selection to post-sale process capture, analysis, design and optimisation internally and externally, with templates, comparisons, KPIs and the rest. Finally, one of the best known is the old Baan Dynamic Environment Modeller – also able to work with non-Baan applications. Again you get the industry reference models, process mapping and the rest. Baan presales consultants John Worth says: “You can start from vanilla or use reference models which map the high level construction of a company.” It’s all good stuff, and Worth says DEM is used in all Baan’s sales pitches, as well as for configuration to speed implementation – but also to help handle change management and identify opportunities. Camberley-based aircraft seating and cabin interior manufacturer Britax Interior Systems, which started using Baan in 1997 used DEM templates and wrote some of its own. Systems manager Graham Leake says the modeller helped new process implementation during a significant period of change. Importantly, DEM remains active, with users from purchasing and production control, sales and accounts, through to the shop-floor and distribution. And that’s the point.