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A model performance from BPM

This article appears in the issue January 2005 [Volume 14, Issue 1]


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Before implementing a business process management (BPM) system, organizations generally develop a model that provides a visual representation of the system to make sure all the pieces of the process are logically connected and work together well. In addition, they may simulate the process to get a quantitative idea of how the system will perform. After a BPM system is in place, modeling can be useful to assess the impact of proposed changes in process. Finally, a scenario-based model can be used to predict performance of the system when faced with a major external event.

Although modeling was used in the 1990s in connection with business process engineering, the software tools were limited in that they did not integrate with BPM software. Thus, they were not able to use real-world data as input, nor could the models be converted to production systems. Now, many BPM software tools include modeling through inclusion of homegrown components or by partnering with modeling products. Combined with analytics, modeling can produce increased organizational responsiveness and efficiency, while reducing risk.

GTESS

As a technology-based business process outsourcer for health plans and benefit administrators in the healthcare industry, GTESS must be more agile than the average company. GTESS handles claims from providers and routes them to the payer for adjudication. The process is similar in concept for each customer, but varies significantly in the details, so GTESS must adapt the flow to each customer's needs. The company uses Fuego (fuego.com) to handle its business process management functions, including modeling.

Several steps are involved in processing claims, each of which may require customization for the client. If the claims are on paper, they must be converted to electronic format, from multiple and disparate sources. Next, GTESS uses an extensive set of business rules and industry edits to make sure the raw data is "clean," meaning that the patient is eligible, went to an authorized doctor and so forth. This step maximizes the chances that a claim can go straight through the adjudication process without human intervention. Finally, GTESS reprices the claims to account for any provider discounts that have been negotiated with the insurance company.

GTESS has seen a noticeable improvement in its ability to predict real-world outcomes in its claims processing. "Before Fuego, our modeling was done based on our experience in handling claims," says Paul Davis, VP of product management at GTESS. "However, a certain amount of it relied on trial and error. Now, we can simulate the process ahead of time and see the bottlenecks."

Because GTESS has service level agreements to which it is bound, the company wants to ensure that it can meet its targets. "We can see a lot more detail as compared to our past methods, and we can start to shave time off the process," says Davis. "We put the right resources at the right point in the process, even if that means putting a client-supplied task in the middle of our workflow."

Improved modeling and reporting also creates better communication with GTESS clients, allowing them better control and visibility as compared with a traditional "black-box" outsourcing environment.

Modeling provides a holistic view of a business. "The typical way of starting a BPM project is to identify a process that is broken and attempt to fix it, such as converting from paper to an electronic workflow," says Wayne Snell, director of marketing at Fuego. "While that is always a good start, it might not be the step that could improve the overall performance the most." Companies want to demonstrate quick results, and while that is not a bad idea, a focus that is too narrow may divert attention from the big picture.

"Sometimes a company becomes obsessed with the optimization of an individual sub-process, and the net effect may actually be negative for total process," Snell says. He advocates taking on one piece at a time—in part because it brings quick and visible successes, usually within a few months—but with an eye toward the long-term goal of optimizing overall business performance.

Improve, Optimize

Few organizations have come very far in the scenario-based use of modeling, but it has the most potential for aiding them in strategic planning across many industries. "The refinancing boom has significantly increased the number of loans that are processed," says Chris Preston, director of product marketing at FileNet. "Lending organizations that are set up to model their processes can evaluate the impact of a decrease in interest rates and react accordingly. Insurance companies can do a ‘what-if' on how a hurricane would affect their resource needs."

The potential impact of upcoming compliance requirements can be modeled, which facilitates better planning and reduces the cost of compliance. So, for a number of practical reasons, simulation and modeling are expected to receive increased attention and use in the coming years.

The importance of the feedback loop between performance and process is also becoming more recognized. "Business process re-engineering acquired a stigma because the model in the early days was to re-engineer and forget, whereas now the mantra is to improve and optimize the performance of a process on an ongoing basis," Preston says.

Critical capabilities

FileNet Business Process Manager incorporates both analytics and simulation in a unified manner by leveraging the exact same modeling environment. Organizations can more accurately measure performance of a new process before it goes into production and provide the means for continuous process improvement.

"Modeling is a critical area for BPM," says Laura Mooney, director of product marketing for Metastorm . "Combined with process intelligence, where data is collected from ongoing business processes, modeling can simulate what is going to happen in the future." A combination of analytics and modeling provides the greatest leverage. Business intelligence by itself is focused on the past and does not reflect any process information, while modeling has limited validity if it is based on theoretical probabilities rather than real-world data.

Metastorm has recently partnered with companies that provide each of those capabilities.iGrafx Process software will be embedded in Metastorm's e-Work BPM software suite to provide advanced modeling and simulation capabilities, and Hyperion's software will provide real-time process metrics. "With this type of continuous analysis, businesses will actually be able to avert crises by changing processes from the management dashboard when an alert goes out," Mooney says.

Automating the modeling allows organizations to perform the "as-is" and "to-be" exercises more easily, but there is no substitute for the careful analysis that should come before implementation. In order to implement a Pegasystems workflow system in its contact center, American National Insurance Company (ANICO) brought together staff from throughout the company. Seasoned customer service representatives (CSRs) who knew the best sequence for handling customer inquiries met with IT staff who would extract the needed data from ANICO's legacy systems. Those best practices were used to determine the specific information that would be presented to the CSR as the inquiry was processed.

Prior to implementing Pegasystems, CSRs often had to exit from one application in order to retrieve data needed to answer a question. Now, the Pegasystems application brings together all the information a CSR needs to answer an inquiry, in the order most likely to result in a successful resolution. ANICO credits the Pegasystems application with helping it to exceed sales growth targets without adding staff, and with generating $70 million in new business during the first six months of the contact center's operation.

Having implemented its system before robust modeling tools were available, ANICO is now contemplating acquiring one. "The biggest advantage an automated modeling tool would offer us is the ability to link the front-office and back-office measures so we can get an overall view of performance," says Gary Kirkham, VP and director at ANICO. "Our customers can get great service from the CSRs, but if their checks don't go out on time, they won't be completely satisfied." By being able to measure and model all corporate processes, Kirkham hopes in the future to be able to optimize the customer service process from beginning to end.

The newly released PegaRULES Process Simulator uses Visio from Microsoft as the front end to build processes and develop business rules. "Processes and rules are two sides of the same coin," says Alan Trefler, founder and CEO of Pegasystems. "If you set up a rule that establishes a review requirement for transactions exceeding a certain dollar value, it might affect dozens of procedures. The system should be able to find those procedures and propagate the rule's effect throughout."

When an existing process is modeled in PegaRULES Process Simulator, the user selects an application and the process flows to be simulated. Once the simulation has been run, it can be analyzed using the PegaRULES Process Analyzer, an online analytical processing (OLAP) tool. That capability allows the user to compare actual work data with data from the simulation.

BPM vs. BPM

Although it most often refers to business process management, the BPM acronym has been used to stand for a variety of other things, including business process modeling. More recently, business performance management has taken on the label. Business performance management seeks to monitor and correct business processes in real time (see "Draw Me a Picture: BPM Gets Analytical," KMWorld Nov/Dec 2004).

The BPM Forum seeks to promote performance accountability across the organization by supporting new processes for visibility and financial transparency. "Process innovation and automation will impact overall performance of companies," says Donovan Neale-May, founder and executive director of the BPM Forum. "Being able to model and predict where problems will arise is a big part of business performance management."


Judith Lamont is a research analyst with Zentek Corp., e-mail jlamont@sprintmail.com.


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