Supporting Process through Social Capital

A business process is an intangible asset which bind man, machine and money together to ensure achievement of business goals. They can be very complicated - as this picture shows after the process data have been put through a mining algorithm.

Analysis, design and optimisation of the business processes is important – but do your analysis look at the social network that ensures effective execution of the business process? Lejano and Ingram defined a social network as a system of sustained, patterned relationships among actors. These relationships typically cross organisational boundaries as defined in organisational charts.

Dimensions of a social network can cover formal institution driven structures, pure informal interactions, or purely social interactions. However, important to note is that they allow the ability to pool competency into formations which can either solve organisational issues, or ensure that organisational policies, procedures and processes fail.

In a number of cases I have seen that the social network (as a social capital element of the organisation), rather prohibits the working of process, than to ensure the optimal binding of man, machine and money.

Case 1 – Mandated Process Communication lines
In this case, the roles and responsibilities were not defined adequately, resulting in people moving tasks between them with no clear responsibility. Delivery times become so long that customers were leaving the company.

Case 2 – Social Gossip structure around a problem process
Projects were not being delivered on time with the current mix of people. In this case, mining the social gossip relationships around a process showed who talked to whom, cluster according to different departments.



































Case 3 – Mandated Process Communication Lines
Mining the process showed a good, well-defined product development process. Upon focusing on the mandated social network for this process, it become clear that the process is failing due to no communication between the different role players.




































So – to be intelligent about your processes means that you have discover what the processes does; but not in isolation of the social capital that ensures its success or failure.
I want to thank Sakhu (http://www.sakhu.co.za/) for providing me with denormalised data from their projects to create these cases.

The Next Killer Ap for South African Telco’s – simplexity.

I have been consulting to a number of industries, including to various companies in the South African Telecommunications industry; telco, reseller, and service providers on business optimization.

Being a bit of a gadget freak; I was an early adopter and got my first cell phone in the early nineties; using a Nokia 2110 brick. Not being totally technical disabled (a PhD in engineering helps), I have been frustrated with the complexity of the telecommunication business over the years from a consumer, and business owner perspective. In simple terms this means for Telco companies that I, as a buyer of your technology services, don’t really understand what you are telling me to buy and use. In my own words - I want a telco provider to enable me to be connected to my world, at a good price, and without hassle.

Obviously I am hooked on my iPhone – on my trip to the Netherlands I had to find a way to stay online with it. Irrespective of one’s net asset value, paying R300 per megabyte on roaming data rates is not acceptable. So, with a “bundle” of questions; I approached the T Mobile shop on Kalwerstreet to buy a prepaid data connection.

What a shock ! 5 Minutes later I walked out with an activated prepaid simcard on my iPhone, loaded with an inclusive voice and data value pack (“beltegoed”). Within a time span of three hours I made local and international voice calls, downloaded my emails, uploaded a few facebook pictures, check my LinkedIn messages, used Googlemaps for guidance, searched for shop locations and prices for toys, gifts and electronic gadgets.

If you didn’t get this, in South Africa you have to buy the simcard, you have to buy airtime, and then you have to convert the airtime to data bundles through USSD, etc., etc. Oh, and if you happen to have an iPhone, you have to find the internet APN address (this is not on the website, and can’t be found through IVR). And then you will most certainly end-up with the wrong billing at the end of the day if you are a postpaid customer. Get the drift ? And by the way, the T Mobile salesperson became very confused when I hammered him with these questions (from my South African experience) to make sure that I WILL get connected.

The South African mobile industry has enjoyed huge growth and fat margins over the past few years; now the market is saturated; and the question is: what now ?

Think about this; my parents are all above 65; they all have cellphones. Their ARPU declined in the past year or so, due the economic recession. Don’t they also talk, share, travel and buy – for that matter; don’t we all ? They are not gadget freaks, they will not persist trying to make something work that is inherently difficult to do – tried a modem set-up lately?

In all honesty all the price plans, options and stuff can be very boring as we normal people don’t work in the telco industry.

Why don’t you focus on making your complex businesses simple to understand, simple to use, simple to operate, and simple to manage . Making your business complexity simple – call it business simplexity.

Now that should be a real cost-cutting driver and S-Curve profit spinner going forward – we will love it.

V. THE WAY FORWARD

Development of a BPM academic strategy requires good insight into the potential impact of BPM on the world. As digitisation becomes more common in business, a company’s BPM capabilities will become more critical. This is a golden opportunity for academics to embrace a new, exciting, cross-functional discipline, and to create the curricula that provide appropriate training platforms for building these competencies.

IV. CHALLENGES IN BPM

The lessons learned show that BPM poses several challenges. A number of additional challenges make training in BPM competencies in South Africa even more difficult.

Politically, South Africa is still obsessed with the legacy of the “apartheid” (segregation) system. In the late 2000s, the social action of various stakeholders such as unions and political parties has become more prominent. Unfortunately, this creates a negative environment for the pillars of economic growth: innovation, trade-free (and fair) regulations, accessible capital, and technology.

Economically, South Africa lags behind in the ‘digital revolution’. At the time of writing, ten new undersea data cables were laid or planned, to link South Africa/Africa faster and more cheaply with the rest of the world. South Africa has one of the highest telecommunication cost structures in the world (mobile phone companies consistently rank in the 75th percentile of the most profitable telecommunication companies in the world), so telecommunication connectivity is expensive and difficult.

Socially, political factors focus on uplifting previously disadvantaged individuals. Ten million people (out of forty million) live on state social grants. As a result, scarce skills and innovation platforms have been neglected since 1994, with evidence of acute skills shortages in the market place. Many companies have put projects on hold owing to the lack of skills.

To implement technology strategies such as BPM, BPMS, and Service Oriented Architectures (SOA) successfully, we need fundamentally different management skills, strategies, and capabilities. In our work with large South African corporates, we see the extreme lack of BPM-required capabilities and of people to assist organisations in BPM, using the best of breed BPMS.

III. LESSONS LEARNED FROM A BPM PERSPECTIVE

The lessons learned from a BPM perspective across the Industrial Engineering curriculum show that a few key themes emerge: complexity, the multi-disciplinary approach, skill levels, and South African socio-economic issues.

Complexity
BPM is a complex science: it requires the balance of man, machine, and money through an ‘invisible’ mechanism – the business process. So when BPM is carried out, all these various disciplines need to be exercised in a way that creates value.

Multi-disciplinary approach
This immediately raises the matter of a multi-disciplinary approach. Besides considering the socio-economic competencies needed to facilitate the appropriate change management and financial management in BPM, the engineering of the system must also play a role. Questions arise: “How do we engineer change into the business system?”; “What does the blueprint design look like for the business?”; and “How do I best allocate and use scare resources in my business processes?”.

Skills levels
BPM deals with the complexity of business, and thus requires a multi-disciplinary approach. So we need the appropriate level of skills to meet these requirements. Companies In South Africa struggle with the BPMS solutions, and even more so with the skills required for BPM.

Industrial Engineering Suitability
Industrial Engineers are well qualified to play important roles in BPM. However, university Departments of Industrial Engineering need to recognise this fact, and align their curricula more strategically with BPM requirements.

II. OVERVIEW OF THE IE CURRICULUM FROM A BPM PERSPECTIVE

The curriculum overview is based on information from the Engineering Council of South Africa’s accreditation visit to the department in 2007 (Van Rensburg, 2007). In summary, the three main objectives of the Industrial Engineering programme are:
a) Providing a graduate with a qualification in the field of engineering.
b) Providing specific knowledge and applied competence in Industrial Engineering.
c) Providing programme contents that satisfy ECSA’s requirements for registration as a professional engineer.

Tables 1 and 2 give the programme contact time and programme content respectively for the Bachelor’s degree.

Credits per semester module are based on the computation of the “contact periods” and “contact hours”. In general, four contact lectures per week (each fifty minutes long) will be an eight credit module. Five or more contact lectures per week can constitute a sixteen credit module per semester.

As defined in the previous paragraphs, one can group BPM competencies in three main areas. In the following table (Table 3), course modules have been allocated to each of these competencies across all four years of study. It shows that the first year focuses on optimisation (basic sciences and mathematical sciences) to provide a proper engineering foundation. In the final year the focus shifts more to business engineering than to optimisation or business architecture.
Table 3: BPM Competency Structure for Curriculum

I. OVERVIEW OF BPM TRAINING @ UP

The University of Pretoria is situated in South Africa’s capital city, Pretoria [University of Pretoria, 2009]. The University celebrated its 100th birthday in 2008 with a student base of nearly forty thousand fulltime and part time students. The Department of Industrial Engineering is part of the Faculty of Engineering, Built and Information Technology (EBIT) [Department of Industrial Engineering, 2009]. The department offers degrees in Industrial Engineering at a graduate level (Bachelor’s) and at Masters and PhD level. Each year the department graduates an average of sixty to eighty engineers from an industrial engineering corps of six hundred graduate and postgraduate students. The staff consists of seven fulltime and fifteen part-time lecturers. At the time of writing, it was the largest Industrial Engineering department in South Africa.

The department began in 1960 as a spin-off from the Department of Mechanical Engineering. It has graduated around one thousand eight hundred engineers in the past fifty years. The Industrial Engineering curriculum is accredited by the Engineering Council of South Africa [Engineering Council of South Africa, 2009]. Through the Washington Accord, Australia, Canada, Ireland, Hong Kong, New Zealand, UK, USA, Singapore, and Japan acknowledge the equivalence of the department’s Industrial Engineering programme. The department is not limited to academic degrees alone: it also contributes to continued education through the university’s organisations, Continued Education at UP [CE at UP, 2009] contract consulting through Business Enterprises at UP [BE at UP, 2009], and research through various university mechanisms such as Centres of Excellence, Chairs, and Institutes.

Many definitions of the term “Industrial Engineer” exist, but in lay terms the industry has accepted that a good definition is “an engineer whose responsibility is to balance man, machine, and money” [Van Rensburg, 2009]. The author extends this definition by adding a very important focus: business processes. Thus, an Industrial Engineer balances man, machine, and money through business processes, in order to ensure an optimal and sustainable business system.

From an Industrial Engineering perspective, we understand Business Process Management (BPM) as a management theory that views business processes as assets to be managed and adapted in response to constant change [Smith et al., 2007]. So BPM can be defined as the strategy for managing and improving the performance of a business through the continuous optimisation of business processes in a closed-loop cycle of modeling, execution, and measurement [Cantera et al., 2007]. The author groups the core competencies for supporting effective BPM into the areas of Business Engineering, Business Architecture, and Optimisation [Van Rensburg, 2009].

Business engineering is the framework for engineering a business system through a change management lifecycle [Van Rensburg, 2009]. This lifecycle covers the phases of analysis, design, planning, implementation, operation, management, and maintenance activities – from both a system and a people perspective [Van Rensburg, 2009]. Business Architecture is the framework for developing the blueprint design of the business system [Spewak, 1991]. The third competency, Optimisation, is defined according to the Operations Research discipline as the scientific approach to determine the best way to design and operate a system [Winston, 1994].

From the author’s viewpoint, BPM is what an Industrial Engineer does. The paragraphs below elaborate on the undergraduate Industrial Engineering Curriculum, and on how it supports the core competencies for enabling BPM.

Critical Success Factors for Organisational Alignment

The most frustrating thing a manager may experience in his job is the effect of misalignment between those things that he or she is responsible for: performance management, operations, business strategy, and customer requirements. To solve this problem, one needs to have certain capabilities in place – unfortunately a huge, diverse set of skills, experience and knowledge.

WHAT ARE THEY ?
a) The balanced scorecard creation is more an art than a science. The capability to do this requires excellent facilitation, deep systems understanding, and wide organisational insight.

b) The Balanced Scorecard‘s Key Performance Indicators (KPI’s) are driven by the Value Chain of the organisation. To define a Value Chain requires highly skilled Business Architecture capabilities in order to conceptualise a practical usable business model.

c) Creating Balanced Scorecard Dashboards is not about the mechanics of extraction (E), transformation (T), or loading (L) of data. It is about the ability to define the data cube from which various dashboards at different levels can be driven. Skilled engineering and data analysis provides the breakthrough on this.

d) A static Balanced Scorecard doesn’t carry a great benefit if it only provides reactive information. Creating a flight simulation of the scorecard allows management to test their strategies in a dynamic manner. To do this, one needs the capability of systems thinking,

systems dynamics, business architecture and mathematical modelling to make it work!

e) Delivering the Balanced Scorecard through Business Intelligence is not about the ability

to create IT systems – it lies in the art and science of collection, simplification and visualisation of data and information.

“Alignment is one of the most powerful mechanisms to balance man, machine and money in the organisation. This is why I suggest that in order to optimise the business, one should look at the “design” of your business. And in this “design”; look at the alignment of all your organisational components! “

In the good land of Value Chains

I think that the "Value Chain" must be one of the most mis-used concepts in business modelling. Even in the academic world one will find the argument around the concept of "Value Chain" vs "Supply Chain". See the following article on another argument around what means what ( http://www.value-chain.org/en/art/120/ ).

The value that I get out of the concept centers around the conceptual understanding of how a business works, and what processes focus on what (e.g. strategic, support, tactical, or operational ). From an architecture perspective each of these have their own inherent designs!
When one creates a translation of strategy into an operational model the following concepts assist in this:

a) Business Strategy
b) Value Chain consisting of its end-2-end processes
c) Supporting Key Performance Indicators for these end-2-end processes.
d) Defined scenario's for the strategy.
















As I explain to people, this mix is sometimes more art than science; and requires a fundamental systems insight into how the business works. If understood and applied in the correct fashion you should get a very clear model which shows the following alignment/or mis-alignment between:
1. What the customer wants; as defined through a value proposition.
2. What we deliver operationally as a value proposition through the value chain.
3. How we reward people (performance system) to do their work.
4. What the business strategy wants.
5. What the risk of all the above is.

In most businesses I have consulted there is always a disjoint between these, and this always causes middle management a huge amount of stress. Some are worse than others; some are less!
But, the success of this exercise is where you are able to create a "flight simulator" for the value chain through which one can model your business plans across time to understand the what-if impacts of different scenario's - impossible to do if you don't have a value chain model.
So in essence the value chain is NOT that pretty ARIS diagram, or only a Porter Value Chain model!

It requires a deep conceptual understanding of how the company creates value as a system.
Good places to start is the use of reference models, I think the following models are for example good: http://www.apqc.org/ ; or http://www.value-chain.org/ , and then, if you seriously want to get confused, look at the eTOM model http://www.tmforum.org/ . I don't know all of them, but I always prefer to look at something that is simple and logical to understand, especially those that can assist in making my business a little simpler.

Can BPM learn anything from commodity trading ?

As an entrepreneur at heart, I believe that leaders of businesses must find ways to balance the need for creating social capital and ensuring sound business development.

In the past few months I have encountered a number of organisations struggling with direction/new challenges in this financial crisis. This happens as I am requested to suggest/advice on business optimisation via Business Process Management. I remembered a number of key principles I formulated after getting rid of a commodity trading business I had for a few years.

....As they say "if you can't do, teach; if you can't teach, consult; if you can't consult; manage money!".

The following discussion on developing your business through business cycles in the market place.

INTRO......

Commodity trading can be traced back to Sumeria in about 3,500 BC, when baked clay tokens in the shape of sheep or goats were used in trade. From the 19th century onwards, modern commodity trading rooted itself in agricultural products such as wheat, corn, cattle, and pigs.

With the advent of the Internet, doors have been opened to retail customers to take part in various commodity markets, 24 hours a day, around the globe. New markets are even now being created by companies, such as Intrade (http://www.intrade.com/), that allow customers to trade any event in the world (this is really innovative!).

The essence of a business is to make money from buying and selling goods and services between buyers and sellers. As individuals, we too are “mini-businesses”: we get up in the morning to trade our time, skill, and knowledge for a pay cheque at the end of the month. As we grow in professional experience, our responsibilities change from being workers to becoming managers – and, eventually, leaders.

One certainty for a leader is that he or she will have to lead a business through market cycles, gaining experience through the good and bad of the ups and downs of the market. It may take years for a leader to gain enough experience to lead the business successfully through these cycles.

In most instances we can only be clever after the fact – after a product has bombed in the market, or after an economic slowdown has made restructuring and lay-offs necessary.

A good leader ensures that stakeholders experience consistent wealth creation as the business experiences different market cycles.

ON COMMODITY TRADING....

At a practical level, the business of commodity trading is easy to understand and operate. In running the business, a trader will experience “booms” and “busts” on an intraday market tick (see figure). These “booms” and “busts” cause the emotions of the trader to swing constantly between greed and fear.

It is extremely hard to do well in the commodity markets: traders need to learn to control their emotions and to do their trade consistently and rationally.

A good example of business cycles was the boom in the property market. Many new speculators, estate agents and lenders entered this market in the upward cycle, not knowing that it is very hard to lose money in a bull market. For the better part of seven years, a false sense of accomplishment was created as they made profits with very little understanding and knowledge of the market. Unfortunately for them, the law of nature is that what goes up must eventually come down (this happened at during 2008!). In all probability, very few people have defined their exit strategies for when this day arrives, and very few will survive to see the next bull market.

In contrast to this, professionals have defined exit strategies and are able to take advantage of the downturn in the market – and still make good money into the next market cycle.

In a short time span, commodity trading teaches important principles for surviving market place business cycles.

PRINCIPLES....

Use market movements: Markets do not have to move according to defined causal relationships. Markets have their own energy and movement: they will move from extreme to extreme. Rather than trying to explain why the market moves, use movements to create opportunities for your business.

Have a great product: Make sure that you have a product that consistently produces good profits for the business through all business cycles. It must have an edge in the market place.

Make wise decisions: Making decisions in business is what leaders do. You cannot be right all the time, but when a decision produces the wrong results, have an exit strategy in place to take care of it.

Plan, design, and implement: You will never know everything! Start as soon as possible to engage in the real market to learn what you do not know. The deed rather than the word is priceless!

Cut your losses: Accept that markets and situations can turn against you and your business. Cut your losses if they do. It is good to acknowledge that you were wrong. It is bad to get stuck in a losing situation, not knowing when to get out.

Expand the business: Expanding the business from one to two customers does not imply double the effort. Complexity grows exponentially as volume and capacity grows in the business. Understand this and deal with it appropriately!

Stick to your game plan: Make sure that your business has a game plan that works in all business cycles. Stick to it, and do not listen to “experts” when the going gets tough. Focus on your plan, and trust your experience and gut feelings.

Accept that tomorrow is another day: If you are not comfortable about a decision or situation, let it pass. Tomorrow is another day for business and profit.

Principles define the value system of individuals. Internalising and following these principles helps them to lead a business successfully.

IN CONCLUSION......

The principles presented in this article are the product of experience gained in running a commodity trading business, and come from having fast-track insight into how markets work on a daily basis.

Business is complex because it is driven by people who are emotional beings. In market movements the emotions of greed and fear are stirred, making it very difficult to be logical, consistent and rational about leadership decisions.

Leaders build a solid foundation for survival in all market cycles by acknowledging the emotions that drive our actions – but also by sticking to solid principles for business development and management.

Market movements are not new, and will continue to be part of our lives. Capitalism's first market boom was the Dutch tulip mania that started in 1633. The market went crazy as people pawned their houses and estates to buy rare tulip bulbs. And then fortunes were lost when the market crashed four years later.

We should get to know ourselves, learn from history and the world around us, and use it to build our capacity and capability as leaders. Only so will we lead our businesses to wealth creation for their stake-holders: our employees, their families, and our shareholders.

.....and this is the advice that still sticks when I look at business plans, strategies and implementation of Business Process Management initiatives -> we can't ignore the basics, or history !

Can you make a million from Open Source Applications ?

The first version of the Siyaka BPM center of excellence was born as an initial idea between the Department of Industrial Engineering, Computer Science and the Department of Science and Technology’s Tshumisano Trust (an initiative which I can never spell or remember how to spell correctly), based on my involvement with the department of trade and industry where we created a wholesale fund which was intended to fund small entrepreneurs (www.samaf.co.za). As part of my exposure to the LSM 1-4 market, I experienced the lack of funding and expertise in this market place, and also maybe how technology could/can contributed to their upliftment.

I was so inspired that I even got articles published on subjects such as “the MBA for the poor”, or “An Economic Development Model” etc. Going around industry trying to find solutions that were going to support this business case even proved harder to be. Coupled this with dynamics of Government, I eventually fled to where an entrepreneur would go – how to do with the least amount of money! Just before this I lost a couple of bar in an IT venture, so development of an IT solution was totally off – financially, physically and emotionally.

This only led to one path – the holy grail of IT : Open Source . With bits and pieces we wired a few servers together, went to the internet and downloaded from ERP to Business Intelligence to Workflow to Banking to whatever looked like it was going to provide a cheap alternative for creating a business application environment (you know; give Bill Gates and al those people a go!).

The hardest lesson learnt – the average Industrial Engineer doesn’t posses a degree in Computer Sciences; so it become extremely frustrating and lonely trying to get IT people to open source their time to implement these solutions (thus, no quick double click on an .exe file and there you go scenario). So in all honesty, the effort to make this work makes it extremely hard for open source applications to take off, except if its complexities become hidden in cloud computing and the user can use it for free or start paying if it takes off.

But not all in vain, in the past three years we have managed to get a number of OS applications to work, with the top scorer our OS Stack Architecture which we use to process our process intelligence queries. At the heart of it lies a reconfigured MySQL database which proved hard to be beaten from a speed and reliability perspective (and its free!). The worst experience – OpenBravo as an open source ERP application; after weeks I could only stare at a green screen with definitely not a user-friendly interface. Our content management system, Alfresco is cool, the Business Intelligence suite Pentaho powerful, but to create data cubes; back- breaking!

Simulation modelling? Yes I can show you OS that does this – but if you remember SIMAN/PASCAL programming under the wings of Prof Paul Kruger then you don’t want to return there, or go and live in Sweden to become a housebound programmer. So instead, we have started to find cloud computing applications to be rather helpful and easy to use, although you pay small amounts for certain functionalities. Here, I refer to something like www.gooddata.com which amazingly processes your data into a cube for analytics, although we have moved to the next level of simple to use applications such as www.sisense.com and www.processmodel.com – not expensive, but it does the job for an industrial engineer who wants to balance man, machine and money.