Defining a Goal Reached - Energy Used value as the basis of business process measures

For measuring the behavior of business processes or the effect of business process improvements usually characteristics like effectiveness and efficiency are used. There are many definitions of these characteristics, which makes it difficult to understand precisely what happens. In this paper an approach is proposed for a basic measurement of business processes in terms of goal reaching and resource using in conjunction, building a Goal Reached, Energy Used (GREU) value-pair. Changes in the business process architecture or supporting infrastructures will lead to a change of (patterns of) GREU-values. When identifying Goal Reached with effectiveness and Energy Used with efficiency the changes also might be explained in these classical terms. For implementing the framework the Actor Activity Diagramming modeling tool is introduced to decompose a business process in terms of states (goals) and actors (energy). Then, with multiple instances of the business process the Goal Reached and Energy Used values are generated and logged, ready for interpretation. Introduction The Business Process Redesign (BPR) developments clearly have put the focus on business processes. Business processes are the vehicles through which organizations reach their primary goals that is making products or services for customers at their requests. Two starting points ask for attention. The first starting point is: organizations are putting much effort in reaching these goals as good as possible, trying to maximize customer satisfaction. On the other hand organizations pay much attention to the amount of resources they use in reaching these goals. These starting points often are indicated by the terms effectiveness and efficiency respectively. In BPR-projects the target is to improve the conditions concerning these starting points inspired by useful advice from several authors. Peppard and Rowland (1995) describe ESIA-rules (Eliminate, Simplify, Integrate, Automate) for making the business processes better, cheaper and faster while Harrington (1991) gives twelve cornerstone tools for streamlining the business processes. All advice intuitively sounds well but when analyzing the effect it is not yet clear how this works out. Does "error proofing" (Harrington's cornerstone nr 6.) improve on effectiveness or Defining a Goal Reached, Energy Used value-pair as the basis of business process measures 2 on efficiency or on both? And how does it work exactly? Or do we need a different framework? The answers are not simple and ask for a detailed approach. In this paper we will try to answer the next question: can we define a universal measure concept for assessing business processes? In trying to answer this question we will first define the basic elements of the business process world and then introduce two characteristics: energy used and goal reached to form the basis of our framework. After introducing a modeling tool to support implementing these ideas we will end with a discussion. Elements of the business process world In this section we will define the basic ingredients of the business process world. Business process BPR has resulted in several definitions of processes or business processes. The definition of Davenport and Short: “A business process is a set of logically related tasks performed to achieve a defined business outcome” is a basic one. The definition has ingredients of goal reaching in the word "outcome" and terms of energy using in the word "tasks". Davenports (1993) definition: “A specific ordering of work activities across time and place, with a beginning, an end, and clearly identified inputs and outputs” has some more details. From the definitions we derive a number of subjects that are essential in dealing with business processes: − The customer producer relation − The product or service − Goal reached − Energy used. Customer – producer relation Any instance of a business process starts with a customer requesting a product or service and ends with the delivery of the requested product or service. Thus any business process implies the existence of a customer–producer relation. This two-party relation is mentioned in other approaches. In the transaction cost theory (Wigand et al, 1997) a transfer of property rights between parties is defined: the customer gets his product and the producer gets paid for it. Dealing may belong to the exchange. In the DEMO-model (Dietz & Mallens, 2001) an exchange is defined in terms of communication. A client asks for a product or service and the producer agrees to it. At delivery the reverse takes place. The producer hands the product and the customer agrees to it. At the two phases negotiation is possible. The producer's organization is responsible for producing the product or service. In our approach we only will focus on agreed business processes. Paths that exist because of negotiations are regarded to be business processes of their own. The customer–producer relation in fact can emerge wherever one party asks another party for something. The parties can be individuals, departments or whole organizations. The product or service The product or service is the physical or non-physical object of the customer-producer relation and is defined by specifications. Specifications concerning physical objects include characteristics of form, color, size, texture, material, and etcetera and admitted deviations in measures. Nonphysical objects are reports, plans, complaints, questions, counseling, and etcetera. Specifications Defining a Goal Reached, Energy Used value-pair as the basis of business process measures 3 of this type of objects include formats, used arguments, correct information, consultation, and etcetera. Furthermore also process characteristics could be part of the specifications: delivery time, milestones, specification and discussion. Specifications are important for two reasons. The organization knows how the product should be made and the customer has an instrument to assess the product he gets. When referring to a product from a catalogue the specifications might be quite clear. However when requesting a new product, specifications have to be determined as a part of the business process itself. A product or service that is produced has several intermediate appearances called states (Eriksson and Penker, 2000). These states appear as results of different production steps. Intermediate states should also meet specifications belonging to these states. The customer only knows these states when the process is part of the product or service. The specifications of a product or service are considered to be the first state and the product or service to be delivered the last state. Goal reached In the context of business processes "goal reached" is defined as a product or a service entering a state meeting the specifications that belong to that state. This definition is true for the end-state when a product or service is to be delivered to the customer as well as to intermediate states. The organization is only responsible for the product or service to meet known and generally accepted specifications (ISO9000-norm). When the customers expect more than specified the organization cannot be blamed. For this reason it is important that the customers request is translated into specifications as accurate as possible. In business processes where translating requests into specifications are steps in the process like software development, precaution should be made to prevent any dispute later on. It is useful for organizations to periodically check the expectations of customers in marketing reviews, possibly leading to adaptations of the specifications or the business process architecture. The organization that is producing the product or service the producer is responsible for the product or service meeting the specifications in any intermediate state. It could introduce control activities performed by quality employees or information systems to check this agreement. Measuring the goal reached is rather complex because each element of the specifications in general has its own specific different measure. We will express a product or service in state i by the term: psi. In these terms than: ps0 is a product or service in state 0, which is the starting state given by specifications and psn is the endstate, which is the product or service to be delivered. Energy used Energy is needed to bring a product or a service from one state into another state. Energy is a useful fundamental concept borrowed from physics, representing all kinds of organizational objects that are involved in the production of a product or service. The objects include: employees, raw materials, semi-finished products, computers, information systems, and etcetera, all to be expressed in units of measurement. The term "energy" is a somewhat unusual element in the business process world but is used because of its fundamental character. Energy is used instead of cost because energy strips the business process from cost influencing factors like wages etcetera. At any time energy can be transformed into cost for a specific environment. Defining a Goal Reached, Energy Used value-pair as the basis of business process measures 4 We will define three basic categories of energy in the context of business processes: actors, resources and information. 1. Actors The actors are the employees of organizations that perform the activities of the business process. Actors have the competence, knowledge and skills to do so. They are responsible for that part of the business process they are allocated to. They have an autonomy with which they can influence the business process. This form of energy is measured in actortime: seconds, minutes, days, weeks, and months. Customers could be regarded to be an actor in the business process because they are involved in at least the beginning and the end and possibly somewhere in between. In the past organizations did not want the customer to participate in the business process because they wanted to offer service to the customer. However in this digital time there is a tendency to incorporate the customer more, for example at Internet banking. If so, the customer has a double role as participant and client. 2. Resources Resources are all objects (except actors) that play a role in the business process. There are several kinds. There are objects that are consumed like raw materials and semimanufactured products as well as objects that are used like buildings, machines and information systems. The use of resources is measured in machine-time, computer-time or in a quantity when consuming goods. Information systems sometimes play a (bounded) autonomous role, for instance when generating reports or assessing states (work flow management systems). In this case their roles in the business process is better understood by regarding them to be actors. 3. Information Information is an abstract representation of objects, like the client’s data, the ordering data, the specifications and the recipe. Information is needed when performing a business process. The amount of bytes could be a measure for information. When consolidating the energy used for a business process we face the problem of the different nature of the energy categories. A kind of normalization of measures could be necessary. We introduce the term: ei for bringing a product or service into state psi from state psi-1, that is executing activity ai. Than by summing over all activities of a business process we find the total energy E. Defining a Goal Reached, Energy Used value-pair as the basis of business process measures 5 Goal Reached and Energy Used framework In a business process, activity or set of activities energy is supplied resulting in a goal (state) to be reached. This is illustrated in figure 1. Figure 1. Goal levels and corresponding energy used For each activity a value of Goal Reached and a value of Energy Used can be determined, resulting in a value-pair, which can be plotted in a two dimensional chart: the GREU-chart (figure 2). When executing an activity several times there will be a distribution in the Goal Reached or/and in the Energy Used values. The same behavior holds for a business process, being an arrangement of activities. For reasons of interpretation the coordinates in the GREU-chart are chosen to give the best situation in the upper right corner. Figure 2. The GREU-chart psI-1