Business Process Management: Closing The Gap Between Rigor And Relevance

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Business Process ManagementClosing The Gap
Between Rigor And Relevance

• By Steve Tieman
• Estee Lauder Companies

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Overview

• Background
• Estée Lauder Companies (ELC)
• Early BPM Implementation Of Product Lifecycle
  Management
• SOA Before The Term Was Known At ELC
• Enterprise Wide BPM And SOA
• Strategic Modernization Initiative (SMI)
• Leveraging BPM Throughout ELC
• Selling BPM And SOA To Senior Management
• Conclusion

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Background On Estee Lauder Companies (ELC)

• One of the worlds leading manufacturers and
  marketers of quality skin care, makeup, fragrance
  and hair care products
• Formed in 1946 by Mrs. Estee Lauder in Queens, NY
• Annual sales of over 7.04 billion (FY 2007)
• Products sold in over 130 countries and
  territories
• Over 25,000 products in the brand portfolio

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Background On Estee Lauder Companies (ELC) Brands
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Part 1
Early BPM Implementation Of Product Lifecycle
Management At Estee Lauder Companies
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Part 1-Early BPM Implementation Of Product
Lifecycle Management Scope
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Part 1 Organization Scope

• 50 Organizations
• 25 Brands
• 36 Affiliates
• Over 5600 Concurrent Projects
• 20 SKUs Launched Each Day

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Part 1 High Level Event Network
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Part 1 Benefits Enablers

• Service-Oriented Architecture Major Cost Of
  Goods Improvement
• Item Master
• Bills Of Materials
• Recipes
• Component Specifications
• Artwork Mechanicals
• Direct Material Sourcing/Contracts
• Business Process Management Major Speed To
  Market Improvement
• 38 Workflow Driven Major Sub-Processes
• Common KPIs
• Common Back-Office Organizations
• Common Measurement And Reporting Platform
• Automation Major Productivity And Accuracy
  Improvement

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Part 1 Challenges To Further Leverage BPM And SOA

• Key Improvement Opportunity Is In The Upfront
  Planning Process
• Current process is documented and understood to
  be sub-optimal
• ARIS/SOA platform can be leveraged as enablers
• Challenge Is To Implement BPM Within The Creative
  Organizations
• Significant cultural challenge
• Concern that creativity may be compromised
• Difficult to fault current practice based on 50
  years of continuous success
• Collaborative approach is promising, but . . .
• Too slow based on the current organization
  structure hand offs
• Very difficult to execute as the brand grows
  larger
• Can BPM Be Used To Drive Changes To Organization
  Structures?
• How?
• Suggestions?
• Success Stories?

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Part 2
Strategic Modernization Initiative
(SMI) Enterprise Wide BPM SOA At Estee Lauder
Companies
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What Is SMI?

• The Strategic Modernization Initiative (SMI) is
  Estee Lauders first implementation of SAP
• Key enabler to support sales growth to 10
  billion and beyond
• Five major business processes are being
  standardized under SMI
• Master Data Management
• Budget To Report
• Procure To Pay
• Demand To Build
• Order To Cash
• Pilot (Aveda) Went Live In May 2007

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Business Objectives For SMI

• Improve Efficiency (SOA And BPM)
• Reduce the number of hand-offs
• Minimize the time spent on compliance activities
• Shorten time and effort by reusing libraries
  and standardized templates
• Implement automated work flow processes
• Reduce waste and rework by implementing clear
  roles, responsibilities, and processes
• Minimize tactical tasks and focus on higher value
  strategic activities
• Improve Effectiveness (SOA)
• Real time availability of accurate information
  through one global source
• Leverage benchmark analyses
• Improve Operations (SAP Platform)
• Better customer service
• Better forecasting
• Better collaboration with Suppliers and Customers

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SMI Application Landscape
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ELC Approach To BPM And ARIS As The Entrance
Point To SOA

• Identify All Processes
• Start with existing leading practice models,
  e.g., SCOR
• Adapt these models to your company using ARIS
• Integrate the adapted models to SAP using ARIS
  EPC (Event Process Chain) methodology integrated
  with Solution Manager
• Subdivide Processes Into Sub-Processes
• Identify process strings based on valid business
  practices
• Normalize Sub-Processes To Become Services
• Identification of all the process steps is a
  product of the EPC development process in ARIS
• Process steps are linked to transactions in
  Solution Manager
• Ensure that a transaction is limited to a single
  process step

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Scope Of The Business Processes Standardized
Within SMI

• 6 process groupings
• Master Data Governance
• Budget To Report
• Procure To Pay
• Demand To Build
• Demand Planning
• Order To Cash
• 114 major primary processes
• E.g. Manage Procurement Contracts And Requests
  For Quotations
• 680 fundamental integrated processes-Process
  Strings

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Benchmarking Experiences During Past Two Years

• Benchmarked BPM With 13 Major Corporations
• All have implemented SAP
• All have established BPM organizations
• All are anticipating SAP upgrades in next 1-2
  years
• Broad Conclusions
• Existing SAP implementations are poorly
  documented
• Increased BPM rigor is anticipated as a
  requirement for success
• Difficult to get senior management buy-in for
  longer than a one time effort
• Can rigorous BPM be implemented without another
  Y2K or SOX?

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Part 3 Vision For The Next Steps
Leveraging BPM Throughout ELC
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Vision For The ELC Business Process Management
Landscape
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Conventional Business View Of The Aveda Call
Center Process
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Conventional Technical View Of The Aveda Call
Center Application
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Conventional Management View Of The Aveda Call
Center Key Performance Indicators
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Conventional View Of The Aveda Call Center
Infrastructure Monitoring Metrics
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Changing Conventional BPM Practice
ForApplication Management

• Challenge No Effective Common Language Among
  Technical And Business Team Members
• Business Process Procedures are in words. Words
  that are misinterpreted, not kept current with
  changes, and at too high a level to be actionable
  by technicians
• Many specialists must be assembled and
  socialized in order to solve a performance or
  functional issue within a single process string.
  They have to have visibility of the entire
  process to be able to merge these technical
  silos
• Result Agility is limited, cross training is
  cumbersome so personal growth is compromised, and
  development costs are higher because there is
  very limited transparency between the process and
  infrastructure

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Changing Conventional BPM Practice ForBusiness
Team Members

• Challenge Measurements Of KPI Actual Performance
  Are Not Available On A Real Time Basis And Do Not
  Effectively Support Root Cause Analysis
• Consist of periodic reports that require
  significant manual work to generate
• Not linked to actual transactions and individual
  end users
• Result Cannot effectively determine why the KPIs
  are not met or analyze reasons for differences
  between end user performance because there is
  very limited transparency between the process and
  the KPIs.

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Changing Conventional BPM Practice
ForInfrastructure Operations

• Challenge Availability And Performance Metrics
  Do Not Relate To The Business KPIs
• Based on infrastructure, not business process
• Based on averages, not maximums
• Based on synthetic transactions, not end user
  reality
• Existing diagnostic tools do not support BPM
• Result Proactive monitoring of the environment
  is not optimal because there is very limited
  transparency between the infrastructure
  performance metrics and the KPIs.

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Conventional Business And Technical Views Of The
Call Center Business Process How Can This Be
Mapped?
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Answer Enhance The EPC To Support All
Stakeholders, i.e., Implement Business Process
Monitoring
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Part 4 Selling BPM SOA To Senior Management
Driving A Stand Alone ROI
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Driving A Stand Alone ROI

• BPM And SOA Are Direct Enablers For 50 Of The
  SMI Business Case
• Current BPM/SOA is focused in Sourcing And
  Financial organizations
• Incremental Benefits Within The IT Organization
• IT Employee efficiency
• Improved service to the user community
• Incremental Benefits Within The ELC User
  Community
• Continuous process improvement can drive
  productivity increases of 200-300 for system
  intensive tasks based on PLM experiences
• SOA enables leveraging the work products from the
  ELC Suppliers
• Current State Of Business Process Monitoring
  Technology May Now Support The Vision
• Exploring ARIS PPM/E2E Bridge Platform
• Exploring HP/Mercury Platform
• Exploring Computer Associates Platform
• Others To Be Discovered

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Conclusion

• Thanks to
• Estee Lauder Companies
• IDS Scheer
• 5th International Conference on Business Process
  Management
• Dr. Michael Rosemann
• Conference Attendees