Business Process Intelligence - Book Report/Review Example

Business Process Intelligence 1.0 Introduction This paper reviews three journal articles from the empirical literature. The topic chosen is Business Process Intelligence. The paper is divided into three sections, each devoted to one article. For each review, an article summary has been provided, the author’s opinion and biases have been discussed and the importance of the article has been highlighted. Finally an attempt has been made to relate the three articles to each other. 1.1 Article 1: Business Process Intelligence 1.1.1 Article Summary The article Business Process Intelligence, authored by Mark Smith and published in the December 5, 2002 issue of the journal Intelligent Enterprise emphasizes the fact that measurement and monitoring of business processes is a reality today because of stupendous technological advancements. The author brings out the benefits that accrue to a firm when there is a convergence between business intelligence and business process intelligence. The paper successfully describes the steps required to drive intelligence into processes by taking the example of a retail store. The limitations of BPI have also been mentioned in the paper. At times, large volume of data is derived from different applications that do not integrate with each other. In such cases, use of data for BPI becomes extremely challenging. 1.1.2 Author’s Point of View and Biases At the outset, the author highlights the importance of improving the efficiency of business processes. The author opines that improvement in processes tends to have a positive impact on financial performance of the organization. The tough business environment has necessitated the need to continuously monitor business processes and become a responsive corporate citizen. Fortunately technological advancements have made life easier for companies to manage the intricacies of the present day competitive world. The paper argues that convergence of business intelligence (BI) and business process management (BPM) software has given a big boost to business process intelligence (BPI). The author cites the example of a retailer who is grappling with chinks in the order-to-fulfillment process, declining customer satisfaction rates and increase in incidence of stock outs. All these aspects have resulted in a decline in the revenue. The retailer can tide over the crisis by measuring and monitoring each of these activities objectively. The paper highlights the importance of aligning decisions at all three levels; strategic, tactical, and operational. The key to success is not measuring historical performance but managing performance at all the three aforesaid levels of decision making. The strategic level sets organizational goals and objectives while the tactical level provides direction to personnel to achieve these objectives. The operational level executes these plans. The business processes, defined as a set of interconnected tasks linked to an activity that spans functional boundaries, are critical for the success of an organization. They have the potency to deliver incremental and evolutionary value. It is possible to link and automate various business processes. The challenge is to align the IT investments in a manner that yield greatest results. The article is exhaustive as it elaborates the multi step process of driving intelligence into business processes. The first step is to identify and prioritize process-level improvements and link them to organizational goals. Application of a performance management methodology is the next step wherein the management has to ‘understand-optimize-align’ and figure out the functional requirements to achieve performance management goals and BPI. It is advisable to create a business process model which depicts the link between business activities and individual tasks. The need to integrate real-time and non-real-time data in the model is highlighted as such integration can help generate meaningful performance metrics. Sophisticated algorithms and models provide accurate forecasts and help businesses plan for the future. The next step entails collaborating forecasts and examining alternatives to improve performance. One the course of action is decided upon, performance targets are set and individual tasks are aligned to meet the desired targets. Automated notifications that apprise individuals about the tasks that require attention should be sent. At the next level, dashboards or scorecards can be created to provide deeper insights into process performance. The same technological framework can keep the customers updated about their order status and, in turn, improve service performance. The author maintains that the scope of improvement in technology to support business processes is enormous. Companies like Oracle, PeopleSoft Inc., and SAP AG are at the forefront of developing technology for new process and integration support. The concept of business activity monitoring (BAM) was put forth by the Gartner Group in 2001. Since then there has been a hype created around BAM whose domain extends to any business area or process that calls for monitoring and alerting. The propaganda around BAM has led many companies, including IBM to join the bandwagon. IBM acquired Holosofx and Tibco and added thereby Praja to its portfolio. The acquisition complemented the company’s infrastructure and made it better-equipped to provide end-user functionality. Purchase and installation of application software is not the panacea for companies. There have been instances where organizations have invested in incongruent, heterogeneous sets of applications and have therefore not been able to integrate their business processes completely. On the supply side, there are vendors who tread into unknown domain and develop applications without understanding the needs of the customers. 1.1.3 Importance of the Article The article is a must read for students as it provides a balanced view on business process intelligence. While the article highlights the advantages of BPI and enumerates the steps to integrate technology into processes, it also uncovers the various limitations associated with the aspect. It has been published in empirical literature because of the depth of information contained in it as well as mention of real-world examples of companies striving to develop applications to assist other businesses adopt BPI. 1.2 Article 2: Challenges for Business Process Intelligence: Discussion at the BPI Workshop 2007 1.2.1 Article Summary The second paper that I have reviewed is titled ‘Challenges for Business Process Intelligence’. This paper summarizes the deliberations that took place at the 3rd workshop on Business Process Intelligence (BPI 07). These discussions took place at an International Conference on Business Process Management in Brisbane, Australia. BPI is defined as a set of integrated tools that help businesses achieve process execution quality. These tools extensively use data mining techniques and statistical analysis. The authors cite three case studies to drive home the point that process mining techniques have come of age and they contribute meaningfully to improve real-world business processes. The article establishes that process mining techniques divulge important details about the working in the organizations. 1.2.2 Author’s Point of View and Biases The author’s point of view and biases have been discussed in the ensuing sections. These observations have been mentioned in the case study analysis. 1.2.2.1 DEA Analysis in Commerzbank AG The business environment in which banks operate tends to put a lot of stress on profitability margins. Customer expectations, fierce competition and heightened regulations necessitate the need for maximum process performance. While the performance in banks is a multi-dimensional process, majority of the focus remains on cost. Banks pay a lot of attention to input consumption, ratio-based productivity analysis and cycle times. The first case study pertains to Data Envelopment Analysis (DEA) analysis in Commerzbank AG, a leading European commercial bank. The researchers analyzed the Securities Settlement and Clearing Process on a multi-input, multi-output basis. The input variables used by the researchers were labor, processing, and data while the output variables were costs, quality, and risk element. The objective was to find out process deficit in this highly significant, revenue generating activity. The evaluation of DEA, a non parametric, non-stochastic efficiency measurement method, is based on the concept of benchmarking. The researchers encountered numerous challenges in dealing with the bank’s operational data. This data was derived from various applications that were functional oriented and not process oriented. There was no single point contact to retrieve the information. The researchers had to use meta-referencing to map unique and overlapping references. Last but not the least, the voluminous data was available in various data formats; IMS, Sybase, Oracle and DB2. The analysis indicated a strong variation in securities transactions in relation to input and output factors. The researchers found that there was no clear cut definition or agreement in the industry about the way a process should be carried out. The study findings established that the DEA can be used as an effective tool to gauge process performance in banks. The researchers suggest that banking industry should identify relevant variables to capture all the aspects of a process and then set benchmarks for all the banks to emulate. 1.2.2.2 Activity Based Costing in German Insurance Company The authors assert that accurate and timely information plays a monumental role in deciding process structures as well as resource allocation. The second case study pertains to the process of activity based costing in a medium sized German insurance company. The insurance company intended to improve decision making by making appropriate use of available information on business processes. The company had already built a warehouse project which stored information on customers and policies. The need of the hour was to expand the database to include transactional or process information in the database. The insurance company had a platform that provided activity based costing information. However the platform made little sense as the information retrieved from this system was incorrect. The data sources were inaccurate and the process of providing information to the executives to enable them take decisions was also flawed. To be effective, any activity based costing system requires information on frequency and duration of activities as well as resources and costs required to run the activities. The system suffered from various limitations. There was no mapping of process activities and number of transactions that were recorded in the company’s mainframe computers. Employees were surveyed to determine the time taken to complete an activity. The resultant output was simply not correct and did not serve any meaningful purpose. As a part of the BPI project, the researchers replaced the tradition paper-based work allocation with an electronic mechanism to allocate activities to individual employees. Then the process was recorded in a workflow mechanism and fed in the system. Finally the audit trial information was fed in to derive activity based costing information from the workflow component of the document management system. The substantial change in information deriving infrastructure had a positive impact on the insurance company’s performance. 1.2.2.3 Outage Management in an Australian Utility Company The third case pertains to the outage experienced by a major state owned public utility company in Australia. The organization had a humungous customer base of 6, 00,000 people and an electricity network of 1, 00,000 km. The outages increased manifold during storms and the issue of timely repair crept in. As a part of the study, the researchers examined the performance of the call centre, the network operations as well as the field staff. The main objective of incorporating BPI in these processes was to understand and alleviate the root cause of the problem. The case demonstrates yet another example of the appropriate use of BPI in the real world and establishes that the techniques can be used across industries. 1.2.3 Importance of the Article The present paper has successfully brought out the application of BPI across different industries. The use of case studies has made it easier for the reader to understand the issues in the real corporate world and appreciate the role of BPI in solving complex business problems. The paper is important as it has clearly brought out the factors essential for the success of BPI. A clear strategy that aligns BPI objectives with the overall business objectives is required. An in depth knowledge and understanding of business processes is a sine qua non for the success of BPI. Finally the success of BPI is dependent on data availability, data quality as well as the integration of technology from where such data is collected. 1.3 Article 3: The Predictive Aspects of Business Process Intelligence: Lessons Learned on Bridging IT and Business 1.3.1 Article Summary The paper titled ‘The Predictive Aspects of Business Process Intelligence: Lessons Learned on Bridging IT and Business’ argues that BPI has tremendous potential in supporting real-time processes. Companies that collect, analyze and predict consumer demand emerge triumph in the present day competitive world. Companies remain agile and improve processes by embracing technology. The paper is based on the application of BPI in a Danish Trade Union. This study approach has been successfully used to highlight the need of integration of technology with management processes. 1.3.2 Author’s Point of View and Biases The authors aver that while BPM is a mature concept, BPI has yet not established itself as a theory or model. They highlight the findings of various other studies including that of Grigori et al wherein the researchers focus on tools that help businesses manage process execution strategy. The authors highlight the emergence of business mining, CRM (Customer Relationship Management) and ERP (Enterprise Resource Planning) from where extracts can be taken to improve certain business processes. The emphasis of the current paper is to suggest that Enterprise Information System (EIS) enables companies to incorporate a robust and flexible infrastructure that has the potency to align business and IT. The paper is based on a real data mining project used to predict churn rate at a leading trade union in Denmark. The name of the union has not been divulged due to confidentiality issues. The problem at the Danish trade union was that their churn rate of 10 percent was considerably higher than the acquisition rate of 2 percent. The union leaders wanted to find out the reasons for the high churn. The researchers conducted a business analysis session wherein they learnt about the services rendered, type of population worked with, and the management's own assessment of why the problem has occurred. The objective was to build a model that could predict whether a customer would churn or not churn. It was agreed upon that a model that worked with 60 percent accuracy was acceptable. At the heart of the exercise was the endeavor to improve customer relationship management. For the purpose of developing the model, the researchers used the SQL server 2005 data mining suite. The software is effective in determining the relevance of available data in relation to the variable to be predicted. This helped the researchers cull out only relevant data. Surprisingly, it was found that the nature of complaint or the type of transaction entered into by the customer did not predict the possibility of churn. Some useful information was collected on the demographic profiles of the customers, their length of association with the union, educational background, fee paid and the type of work performed. The researchers divided the available data into two sets; one for developing the model and the second for testing it. The findings suggested that membership fee played a monumental role in churn. This came as a surprise as the union tried to keep the fee as low as possible. The other two factors that emerged as important reasons for churn were customer seniority and work trade. 1.3.3 Importance of the Article The article gains a lot of importance because of the application of academic rigor and mathematical modeling in a real life situation. The paper clearly demonstrates that complex business problems can be solved with the help of BPI. 1.4 Connection and Relationship between the Papers The review of the papers has provided an in-depth knowledge about the concept, scope and challenges of BPI. The papers highlight that it is important to understand the end-to-end business processes before BPI can be implemented. The papers have used real-life examples to demonstrate the application and efficacy of BPI. The importance of availability of accurate and relevant data has also been highlighted in all the three papers. The case study approach in all the three papers has enabled me to grasp the essence of BPI. Another common thread running between all the papers is the revelation that use of appropriate and up-to-date technology goes a long way in making BPI endeavors successful. References Genrich, M., Kokkonen, A., Moormann, J., Muehlen, M., Tregear, R., Mendling, J., & Weber, B. (2014). Challenges for Business Process Intelligence: Discussions at the BPI Workshop. In A. Hofstede, B. Benatallah & H. Paik, Business Process Management Workshops (1st ed., pp. 5-10). Springer. Retrieved from http://books.google.co.in/books?id=82uC782Yd9gC&pg=PA5&lpg=PA5&dq=Challenge s+for+Business+Process+Intelligence:+Discussions+at+the+BP Perez, M., & Moller, C. (2014). The Predictive Aspects of Business Process Intelligence: Lessons Learned on Bridging IT and Business. In A. Hofstede, B. Benatallah & H. Paik, Business Process Management Workshops (1st ed., pp. 11-16). Springer. Retrieved from http://books.google.co.in/books?id=82uC782Yd9gC&pg=PA5&lpg=PA5&dq=Challenge s+for+Business+Process+Intelligence:+Discussions+at+the+BPI+Workshop Smith, M. (2002). Business process intelligence. Intelligent Enterprise, 6(1), 26-29+. Retrieved from http://search.proquest.com/docview/200673794? Read More