An Overview of Business Process Modeling

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	Discussion Forum "We use Proforma's ProVision - Enterprise Edition here. I love it. You can model many different aspects of your business at various levels of detail and still be very flexible in your presentation of the information, which will enhance communication. I consider it to be more of a modeling tool than a BPM tool since you don't really use it to automate any processes/workflow, but you will have everything you need to analyze and understand them better." Contribute to this Discussion

As an integral component of business process management (BPM) software, modeling is an invaluable tool businesses can deploy to map out, test and change business processes prior to implementation. Providing the link between expected BPM capabilities and the current state, modeling can quantify BPM performance and forecast the system's ability to respond to internal and external changes.

Critical to the success of BPM implementation today, business models were first introduced in the 1990s. Unconnected from BPM software (which didn't exist in its current mold) at the time, they met with limited success. Now, modeling tools are an integral component of BPM software, though they also still exist as stand-alone solutions.

Modeling helps organizations to:

• Organize business processes using a formal, logical framework.
• Facilitate process documentation into a single, consistent record.
• Integrate process models across data, systems and organizations.
• Identify system bottlenecks.
• Relate business processes to organizational resources employed.

Practical Modeling

The first practical step in BPM implementation, modeling encompasses analytics and simulation in a three-stage process that allows organizations insight into processes and performance in key business areas:

1. Modeling: Connecting, characterizing and reflecting business processes in a model of the system to assess logical process flow. Post-implementation, modeling helps to quantify the impact of intended process changes.
2. Analytics: Analyzing key metrics to determine performance, establish operational and process efficiency, and determine ROI to justify BPM implementations.
3. Simulation: Conducting real-world data test runs to measure system performance and introduce "what if" scenarios to measure external change responses.

In building the model, however, you need to keep several points in mind.

Develop a vision model

The key to building a successful model is to focus on organizational goals and then intertwine expected behavior with resources, value and supplier chains and business processes across the organization. In developing strategies to meet organizational goals, business analysts need to be aware that the association between strategies and processes is an important one, and that value chains are likely to cross several departments or entities within the organization. For example, a mortgage finance company may decide to improve profitability by reducing its bad debts. In the course of that, it might determine that it needs to introduce a more stringent process while approving new loans, bring in the IT department to generate historical bad debt data and statistics and introduce improved methods of recovery.

Determine the process

Set out and document business processes, their logic and flow to achieve objectives. For example the processes involved in claim authentication in an insurance company might require that the claimant be authenticated using several checks, that the claim amount be within the policy limit, that it has gone through a validity check and so on.

Modeling: How It Helps

The way in which BPM software is designed nowadays makes it easy for users to define business rules in their models. When built on the appropriate standards, newer business models work in a boundary-less or seamless fashion with other business applications, allowing users to define constraint-free "on demand" changes as they're needed. This enables business models to incorporate real world data ranging from simple data arithmetical calculations to highly complex scenarios involving business rules, intricate formulas and calculations.

Businesses use modeling to achieve clarity, by defining key capabilities expected from the BPM system.

In the case of a claims processes business model of an outsourcing company that handles insurance claims and forwards them to insurance companies for settlement, the models could help the company to establish:

• A general process for all provider claims, encompassing different multi-source data entry and several steps in authenticating claims in line with provider and industry-specific requirements.
• Provisions for handling detail differences between providers, such as discounts owing to providers emanating from agreements with insurance companies.
• Service level agreement targets.
• A framework for options in building business relationships for management discussion.

The modeling process also helps develop a richer understanding of expected system capabilities that will be required to support the work load. At this stage, the outsourcing claims processing company could decide how its processes should work detail by detail. Data input, for example, could be scanned in or manually entered. The company could decide how to collate data from its many and diverse source points and incorporate rigorous screening checks. It could assess the process point at which to customize claims, additional checks to perform and establish what authorizations and business rules apply. It could then test the model, identify bottlenecks and make improvements before executing the modified business process.

Modeling enables organizational agility. Using business rules, the company can model changes fast and see the effects and bottlenecks arising from process changes ahead of implementation. A mortgage company could use a business model to organize and make changes to front-end loan application processes and predict effects on processes down the line. This would enable it to respond quickly to changes, implement "trouble-free" changes and enhance customer relationships.

Modeling is highly effective in the forecast of pricing impacts. A mortgage financer could check the effects of varying interest rates on its bottom line before it decides how to respond to market events. Similarly, a manufacturer could determine the impact of changing a supply channel by configuring modifications to tariffs, labor cost, expenses, taxes, credit terms, quality control, commodity issues and contract issues.

Modeling can be helpful in spotting trends and making projections. A wholesaler of supermarket products, for example, might use customer feedback to analyze sales trends of its 400 product lines over a period of time. This would help it determine changes in taste and marketing and respond quickly. Those maneuvers could help it boost profitability, re-allocate resources, plan production and provide better customer service. An outsourcing claims processor could apply modeling in configuring complex calculations involving the number of transactions per provider, employee and other resource costs to determine the profit it makes per provider.

Modeling is also useful in analyzing transaction patterns. As part of its approach to preventing fraud, a credit card company might use a model to analyze the ratio between high-value transactions and those that are fraudulent.

Modeling is also useful to determine risk. An insurance carrier could assess the impact of an earthquake on its bottom line, evaluate its exposure to the risk and respond accordingly in its rates and market scope.

Some examples of BPM modeling programs include G360 from Global360, Websphere Business Modeler Advanced V6 from IBM and the Savvion Process Modeler. Each is capable of helping you to facilitate implementation, planning, forecasting and analysis, to accommodate today's business mantra: constant change.

Useful Links

Global360 G360 Process Simulator and Process Modeler
http://www.global360.com/products/g360_enterprise/features/process_simulator/
http://www.global360.com/products/g360_enterprise/features/process_designer/

IBM Websphere Business Modeler Advanced free trial version (440M)
http://www.bpmenterprise.com/PU9

Savvion Process Modeler free version (registration required)
http://www.savvion.com/forms1/process_modeler.php