TomDebevoise.com

Introducting the process modeling foundation (PMF).
A by product of years of working with BPMN process modeling, we have created the PMF as an outline for methods you progressively adapt to your needs. The PMF directs process diagrams construction building models from the earliest strategy phase to the goal: execution. In short, there are no wasted efforts.
Modeling Maturity
In process modeling, your organization likely seeks improved performance and alignment or reengineered processes. More often, it is the decisions that need improvement. In the introduction, we described the 5 layers of a BPMN process modeling framework (PMF). In the first layer, core processes activities and flows are modeled. In the next, critical decisions are identified. Through increasing and detailed process modeling, increasing understanding arises. We suggest you start process modeling by defining core business processes.
In your joint application design sessions (JAD), firms often make ‘happy days’ use case scenarios, business modeling or creating workflow diagrams in Visio, or combinations of all of these. These use cases (and business cases) haphazardly gather more (or less) information than defined in the PMF. A use-case approach often models too-many details of the processes. This is: from the core level through work flow scenario. The implication, and our experience, is that this approach is too ambitious and leads to uneven and unpredictable results. Processes steps are confused with business rules. There is a tendency to cling to old, batch oriented patterns. JAD Participants become bored and frustrated.
A ‘happy-day path’ only considers flows that occur when the process manages no exceptions. You can take this approach by focusing on activities, gateways and flows. So, someday your team should visit ‘unhappy’ branches. Converting the use case or work-flow into the formal needs of a business process model in BPMN can be challenging.
As your organizations become more mature in BPM, yours will create process models directly in business process modeling notation (BPMN). Beyond the core business process, these JAD sessions are chiefly working on process and scenario modeling in the PMF. As your experience grows, your firm will probably separate the use case scenario into these levels.
Business analysts should become process analysts that build executable processes with BPMN in the process modeling framework. Until then, you need an approach to translate the use case or Visio diagrams into an accurate BPMN model of these workflows. You might convert existing use-cases into BPMN or you might transition the organization to a BPMN. This chapter offers these simple guidelines for both.
If digitizing a process is your goal, then moving a use case into a BPMN business process model prepares the way for model execution, moving a use case through the layers of the PMF.

How could we get along without it?

Here.

And then Dick said “The first thing we do, let’s kill all the lawyers”. It seems we have been here before.

The topic is the current fiancial crisis and using business processes to prevent this from hapening again.SIV’s for dummys is here, thanks for the content Motley Fool!

As a process and rules geek, I can’t help wondering what set of tools could be made available to government and investors to prevent this type of imbalance in the credit markets.

SEC has a rule for reporting fraud. This is the proposed rule for investment advisors and the basic rules has been approved. Jones Day has a technical description of this here.
To quote the regulations:’”Fraudulent and deceptive activities which are prohibited and the extent to which the Commission is limited in this area by common law concepts of fraud and deceit… I wonder if knowingly bundleing a bunch of sub-prime mortgages as AAA rated is fraud?Reporting is under CFR Part 230, and 17 CFR Part 275

The problem is that the tightly regulated banking insdustry has avoided tight liquidity requirements by creating these off-book vehicles. Yet the chickens have come home to roost.

Oft-mentioned patterns are within the work of the Netherlands researcher Wil van der Aalst. Dr van der Aalst and other researcher identified twenty-one workflow patterns that define the universe of possibilities that a ‘complete’ workflow engine must address. The seminal paper, entitled ‘Workflow Patterns’, is readily available on the internet. These patterns were not designed to solve business problems. They were designed to be ‘complete’ in a theoretical sense. If software workflow engine can successful run the patterns, then the engine is certifiably complete.

Some of the patterns offer compact solutions to workflow pattern. But their descriptions are not focused on business problems. There are some complete BPMN solutions to the patterns on the internet. One the best is Steven White’s ‘Process Modeling Notations and Workflow Patterns’.

Some of the van der Aalst patterns present good solutions for coordinating workflow scenarios. If you match the needs of coordinating many processes with the correct workflow solution, you can avoid painful reconstruction of processes.

Some of the important van der Aalst workflow patterns that we have already discussed, with simple BPMN include:

• Synchronizing merge is a pattern at a point where many subprocesses merge. The workflow ’synchronizes’ the output from all the incoming parallel paths.

The synchronizing merge pattern causes adds the inclusive parallel path shape to the BPMN specification.

• Deferred Choice, the point where the process makes one of several choices from several alternates.

In the process it represents a point where alternatives are based on an Event that occurs at that point in the process. And the deferred choice pattern calls out the event gateway in the BPMN specification.
There are 19 more patterns that have technical names and different solutions in BPMN. Some match to single BPMN shapes, others correspond to configurations. Understanding and knowing these is not compulsory for successful processes modeling. What you should understand is the workflow patterns created many of the BPMN shapes. The combinations of shapes create a powerful approach to workflow modeling.

As the year ends, I would like to offer a humble opinion, or two. I also have some thoughts about the topics of this blog.

Many deep political, economic, business, or technical struggles often fall about a materialist compared with deterministic view of the universe. The materialistic supporters define a fixed, unchanging truth or dualism. Deterministic supporters believe truth is created by causes and conditions. Debates rage and monikers follow. Determinists call the materialists nihilist and the determinist call the materialists dualists or relativists.

Why should we diverge into philosophy? Like it or not, your philisophy guides your choices. I take a radical view of management movements and betray my biases. First, debates in management theories and the technology that support them have a materialist versus the deterministic nature. Command and control (C2) styles of management and present a materialist view of management practices because they believe there is a ‘fixed’, parameterized nature to management objectives. Management is carried out by overseeing these. Chief among these is the approach offered by Kaplan and Norton in the title “The Balanced Scorecard”, I offer this quotation:

“Strategy is a set of hypothesis of cause and effect. Cause-and-effect relationships can be established by a sequence of if then else statements…. Every measure selected … communicates the meaning of the business unit’s strategy.”

Yet the BSC  approach assumes critical performance indicators will oversee unpredictable changes. The book states “…the scorecard enables senior executives to specify not only the metric by which success will be evaluated … also variables considered important”. In other words these senior executives know what these factors are. The assumption Kaplan and Norton makes pervades C2 tendencies. Management knows best, we, control the horizonal, we control the vertical, there is no need to seek countervailing evidence.

The deterministic, opposing view point is offered by six-sigma management approaches. As my earlier post have noted, monopolistic control of knowledge, incorporated in agile decision practices is the key to building a high performance organization. Yet the goals of the firm have not been articulated. So, I betray my leanings toward deterministic structures and approaches.

My management book of the year

And the winner for the 2007 Business Process Management with a Business Rules Approach Management book of the year is ….

Thich Nhat Hanh is one of the great ecumenical spiritual leaders of our time. He is over 80 and he has written many powerful books. He is also widely quoted. One of my favorites is: ‘Sometimes my joy is the source of my smile, sometime my smile is the source of my joy’.

In this book he teaches us what power is and how to use it in an ethical and practical way. He presents a determinist way for understanding and applying power to our lives.On a practical business note, Yvon Chouinard wrote appendix b and discusses the role of Zen Buddhism in his views of business and corporate governance. Certainly, Yvon is an icon in business and his company Patagonia has panache and a global reputation for ethical conduct, environmental awareness and innovation. For my generation and ilk (slightly post hippyoutdorsey children, of the 70’s) as a paragon, Yvon probably exceeds the likes of Bill Gates, Warren Bufette or Larry Ellison.

Knowledge is the key factor of production for all modern economies. Old economic models held the traditional factors of production were land, labor or capital and these factors fuel business process. Interestingly, Wikipedia’s Business Processes definition includes a reference to Adam Smith’s description of the pin factory, from the 1776 book, “The Wealth of Nations”. Smith’s traditional factors of production are still important. In modern terms they have become marketing, business delivery, information technology and personnel. Yet individually, or collectively, they do not and cannot explain global growth. The business processes in Smith’s book address microeconomic principles and practices. It was an analogy, or model, for an individual enterprise with its division of labor. The model describes falling cost because of raising scales and managing the classic actors of production, and the pursuit of greater returns. The ‘pin factory’ story describes macroeconomic industry principles and practices using the notion of the “invisible hand of perfect competition”. The hand is a force that leads to new enterprises entering profitable markets and copying other profitable enterprises and their processes. Supposedly this would lead to rising cost because of demands on scarce resources.

Contradictions arose in the rising cost model in Adam Smith’s Economic model. The model led to the belief that, because of competition, no enterprise in the industry will set and keep their prices and profit margins. The result is decreasing profits to all enterprises in a given industry. We know the importance of knowledge in the enterprise has outdated these ideas. Firms still enter profitable markets and copy other profitable enterprises processes, yet they improve the process with a ‘monopolistic’ control of knowledge.

In 1990, Paul Romer published ‘Endogenous Technological Change’, which treated “knowledge as an endogenous factor of production”. Romer’s ideas became widely accepted after he and other economists developed a model that includes and represents “existing knowledge” and the “growth of new knowledge” in global and national economic models. These extended, knowledge-focused models show it is chiefly available “existing knowledge” (either proprietary or non-proprietary) and the “growth of new knowledge” that is responsible for worldwide and local economic growth (GDP). Growth in “proprietary Knowledge” and managing an enterprise with a “monopolistic competitive entity” has been responsible for sustained worldwide economic growth and increasing returns. It is not land, labor or capital or marketing, sales, factories and personnel based on a fixed economic demand.

Further, Business Processes built solely on the backs of outdated models will not build future economic growth and profit. Economists and business management theorists have recognized this only recently. Or more subtly, business process built without the benefit of knowledge-based decisions cannot keep their business profitable. Moreover most processes are brittle and have been constructed with many outdated assumptions. This is little comfort for the many firms that seek to retain the knowledge of the retiring ‘baby-boomer’. Knowledge” and the “creation of new knowledge” in all its domains and forms are the key critical success factors in all modern firms. Knowledge needs to be identified, defined, and incorporated into the decisions that create and maintain agile enterprise structures. In turn, these knowledge-driven business processes generate timely products, services, and profits.

In June, 2005, Frank Rhode published an HBR article, ‘Little Decision Add Up’, that captures the value of decision in profitability. Figure 1.1 graphs the decision yield concept: the value of the decision declines with the frequency of the decision. Small decisions hold the greatest potential for improvement. Infrequent, large scale decisions include mergers and acquisitions. Small scale, high value decisions include customer sales and support, employee onboarding and others. You improve the small-scale decision by improving the outcome. Outcome is improved by raising the accuracy. In the decision there is an increasing role of knowledge on the decisions. Almost pure knowledge is needed to make very large scale decision on the left and almost pure information makes very small decisions.

Figure 1.1 This graph depicts the value of frequent decisions and the role of knowledge in these.

Figure 1.1 is idealized. Decisions at the frequent, small valued levels often require a burdensome quantity of knowledge from employees. Many processes are not properly digitized and the policies (business rules) are not understood. As firms become more mature in processes and managing decisions less knowledge is needed to make small decisions.

Agility Theory: One Transport Mechanism for “proprietary meta-knowledge”

More recently Romer pointed out the most important proprietary knowledge in the future will be “proprietary meta-knowledge”. This includes how to support the production, transmission and use of all types of operational, proprietary knowledge. He doesn’t tell us what the concepts, content, practices, artifacts, structure, standards or products of “proprietary meta-knowledge” will be. Because it presents a workable model of this, Agility Theory provides an important part of the structure to this knowledge. It is a critical form of meta-knowledge. Agility theory provides some insight about how economically-focused, enterprise-oriented, proprietary meta-knowledge will evolve, be implemented and be utilized.Enterprises, industries and whole economies must develop and use meta-knowledge and knowledge. The risk is that they might not grow or be able to sustain themselves as part of the rapidly changing, global economy. Agility Theory provides a framework for the growth

Therefore by definition, business agility is a critical metaknowledge framework a process that incorporates a firm’s value creation into a learning framework.

My latest BPMInstitute Article is posted here.
It is actually an quote of my new work in progress ‘Designing Business Processes for Business Agility through Agility Theory’.

Larry Goldberg from KPI helped me with the information in this post. Thanks! The Sucess Stores are based on an article written by Barbara von Halle.

Business Process Management (BPM) is the identification, understanding, and management of business processes that link with people and systems in and across organizations. Business Decision management (BDM) is the practice of identifying business decisions in the business processes and supporting these with business rules. BPM/BDM, a combination of technology and management approaches, is emerging as the leading path to business agility.

Most organizations and IT projects today do not have a consistent approach to controlling business process. They are unaware of important details of business processes, business rules and their importance to operational decisions. The process steps, policies and rules might be hidden - buried in manuals or in system designs. Here, details are likely to be lost, unknown and resistant to change. In many organizations this condition may be acceptable. Yet, if a firm experiences some of these symptoms they may consider reaching for a better approach. For Business people:

• Staff seems unable to make objectives happen fast enough. Every new project is a struggle, like starting from scratch, and getting managers, operations and IT to agree is a major headache.
• Business units don’t cooperate. Timelines are missed; reports are incomplete. Meshing agendas challenges everyone.
• When business conditions change it is almost easier to start by developing a new system than to change the system.
• IT doesn’t deliver on our requirements
• Customers get different prices, service quality, and answers to their questions from different parts of our enterprise. Many of our processes are repeated across the business, each with their own IT system

For IT People:

• Business doesn’t give us requirements that we can rely on, and they change them during the project
• We have a growing backlog of changes and requirements and a shrinking budget

Many companies experience these common management and performance problems. The solution can be to adopt foundation practices in BPM/BPM. These practices formalize, document and position for change management decisions and the steps needed to carryout the plans. Business though leaders such as Michael Hammer, have shown that these practices will measurably improve your firm’s maturity and mature enterprises work through these challenges with ease.

Numerous firms have improved their performance with BPM/BPM. Here are a few BPM/BPM successes:

Responding to regulations: Oregon Public Employee Retirement System

The Oregon Public Employee Retirement System (OPERS) experienced many of these symptoms in meeting regulatory requirements, litigation concerns, and audit concerns. Businesspeople in OPERS sought more direct involvement in changing processes and decisions. They needed rapidly change processes and supporting decisions. To improve, OPERS took a BPM/BPM approach. It used BPM tools (IBM’s Rational RequisitePro) to capture rules and coordinate changes with business teams.

OPERS increased business agility by combining a process/decision repository with strong business involvement. Also, responsibility for documenting and specifying rules and rule change passed from IT to business users. Where the rule change, approval, test, and deploy process quickened from two to three weeks, to three to five days.

Deploying new products: Freddie Mac

Freddie Mac, the mortgage finance titan, experienced many challenges in creating new loan programs. To improve Freddie Mac’s management strived for continuous service improvement, quick response to dynamic market conditions and competitive advantage. The organization sought to standardize decision making control and business processes across projects. The approach included creating a Business Rules Center of Excellence, adopting BPM/BPM technology, and setting up standards and processes for business rule governance. As a result, Freddie Mac experienced rapid benefits: implementing a new loan program finished 5 times faster than the equivalent deployment on a legacy system.

A more complex scenario: Pershing, LLC

BPM/Decision Management technology is widely used in the financial services industry, so investment was seen as a competitive differentiator at Pershing LLC. This firm provides processing services to than 1,100 institutional and retail financial organizations and independent registered investment firms. A subsidiary of the Bank of New York, Pershing requires consistency and reliability in the face of financial market volumes, and conformity across business processes. These processes control compliance, credit and business risks. Pershing wanted the benefits of enterprise?level decision that could be shared and applied across the organization.

Before using BPM/BPM techniques, Pershing had difficulties meeting strict compliance requirements and transaction volumes. Also, decision needed to be broadly applied yet customized by individual business units.

The BPM/BPM effort bolstered rule reusability, uniformity and regulatory control. Pershing processes orders more quickly and efficiently, according to Ali Quraishi, a director in Pershing’s Technology Group. The approach improved business agility. When market conditions change, the firm can quickly respond, with business experts driving the rule changes.

Resolving a Customer Support Crisis, and Embarking on a Long Term Strategy from the Profits: A Major Telecom

A major telecom was experiencing a crisis in its customer support: many of its retail customers were receiving conflicting messages from various different operating units, resulting in confusion and customer dis-affection. The company had completed an enterprise data project to align its data models, but determined that embedded business rules, marketing and billing problems were the source of the problems.

The short term solution was to implement a BPM/BDM project that established a Center of Excellence to (1) Mine the existing business rules from code, (2) establish a Rules Governance Council, and (3) Fix the immediate business rule crisis.

The savings arising from this short term fix were considerable, and more than sufficient to encourage the organization to embark on an enterprise endeavor that embedded the BPM/BDM process into its methodology, particularly to enable it to support the offshore IT activities that it was engaging.

A Governance Process was adopted, the IT methodology was updated, and the company implemented the KPI BDM/BPM STEP WorkBench to manage business rules and process. The results are that the business rules have become consistent across the enterprise, and traceability drives continuous improvement.

A Ten Year Case Study of Strategic Success

In the mid-1990’s A mid-size financial institution in the mid-west was achieving significant success in the field of group stated contribution plans: however it was experiencing significant growth problems:

• Employee growth was almost as rapid as business growth, making it difficult for the company to compete with its competitors on cost;
• Service to customers was declining due to the fact that many of the processes and rules of the business were being managed outside of the business systems. Training of the growing staff was expensive and did not in itself resolve the problem of wide variances in the implementation of process and rules;
• The company’s IT system was old, batch oriented, and did not lend itself to simple changes even though the regulatory and business environment the company was in demanded rapid evolution and changed.

After consideration the company embarked on a large scale, enterprise wide BPM/BDM solution that would utilize the existing IT assets, but place a tier of Process and Rules upon the legacy code. The company chose this course because of many considerations, chief of which was that the solution could be accomplished in less than half the time of a conventional approach.

Within a two year period the enterprise solution was rolled out, and over 2,000 users were deployed.

The medium term result was a significant drop in per-transaction cost, and a complete cessation of employee growth. The quality of the organization’s customer service improved dramatically, and the company was once of the first in its industry to roll out self-service on the web for its products. The company rated the system as a “significant strategic advantage”.

Now, more than ten years later the company is a global leader in its field, with one of the lowest per-transaction costs, and one of the highest customer satisfaction ratings, in its field.
The motivation for a business process and business decision management approach

Summary

Business Processes and Operational Decisions are important intellectual assets. Most businesses do not document and manage these assets. Ownership of the business processes and the operational decision are often surrendered it to IT. No standardized common repositories and tools to document and share these assets across the enterprise. Organizations can overcome these challenges with a combination of BPM/BPM technology and approaches. We have briefly described how several large firms improved business agility and cost costs through adopting BPM/BPM technology.

There is an excellent, albiet commercially motivated, presentation on ActiveMQ which is the messaging portion of ServiceMiX. It is posted here.

The starting presentation is here. The first presentation discusses a good resource for understaning ESB, SOA and business requirements. The article is here.

I got a very interesting email from a CIO I wanted to share my response with my readers.

Dear Tom:

My name is Marcelo Saparrat, I am the CIO of TecnoAp Corporation in Argentina, and I have bought and read your book “Business Process Management with a Business Rules Approach”.

Tom, in our company we use RUP (Rational Unified Process) to develop software, and as you know RUP is a strongly use-case driven methodology. When analysis of use cases have been completed, begin several iterations of analysis & design, implementation and testing, making an incremental building of the system. We have an ISO-9001:2000 certification, and our software Design & Develop process is entirely audited and certificated.

BPM/BR approach is a paradigm different of how to develop systems strongly customer targeted, and we are a bit lost of how and where to insert BPM/BR analysis inside RUP activities and phases.

Summarizing, the develop process is:

Requirements elicitation -> Use cases analysis and construction -> Analysis & Design -> Implementation -> Testing -> Deployment

Obviously, the sequence from Analysis & Design forwards, is repeated in several iterations which are determined in the Software Development Planning. The question is where to insert the BPM/BR activities in the sequence described above. The use case analysis must be carry out before the process and business rules design?. The process diagrams outcome is obtained from uses cases flow events descriptions? Or on the contrary, after requirements elicitation the next step is to build the process diagrams and to determine business rules? If this is the case, how to link the process diagrams outcome with use cases analysis? And by last, is it possible to apply RUP methodology in a BPM/BR project ?

We will grateful for your support, because we have several doubts about the methodology to use in a BPM/BR project.

Best regards.

Marcelo Saparrat

Director de Operaciones

TecnoAp

www.tecnoap.com

Marcello
You raise a good set of questions:

1) The use case analysis must be carry out before the process and business rules design?.

Many organizations use the use-case to articulate process requirements. What I have discovered, in my practice, is that business analysts do not differentiate between process and business rules. This is understandable because they have not been trained to discern the ‘decision points’ in the process steps. This leads to a poor-choice of what the ‘requirements are’. If you adopt the business rules approach then you will ‘harvest’ and manage business rules in manner that is separate from the use case definition.For instance suppose you are developing a contract ordering process and your use-case begins to list approval steps:

1) If the contract does not expire with in 30 day of the scheduled delivery date
2) and the vendor is not late on 3 or more deliveries
3) and the vendor as active certification for …
4) (More)

Then approve the order.

Steps 1 through 4 are business rules. In the BPM/Rules world, the requirement is to support an accurate approval of the order with business rules. Since business rules change and should managed by business users away from software, they potentially fall outside of the ordinary RUP process. Use cases would be unnecessary. BRMS software can manage changes to business rules.

The process diagrams outcome is obtained from uses cases flow events descriptions? Or on the contrary, after requirements elicitation the next step is to build the process diagrams and to determine business rules? If this is the case, how to link the process diagrams outcome with use cases analysis?

I posted a short article on developing a separation between process and rules here.

And lastly, is it possible to apply RUP methodology in a BPM/BR project?

Organizations using RUP will need to decide what to include in the use-case as requirements and what to manage with the Business Process or Business Rules Software. I would focus on the decision points for the business rules and process goals for business processes.