Theory and real-world practice

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IN

DEGREE PROJECT ELECTRICAL ENGINEERING, SECOND CYCLE, 30 CREDITS

,

Theory and real-world practice

SOREN KAVOSI

KTH ROYAL INSTITUTE OF TECHNOLOGY

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Abstract

Business improvement frameworks are of high importance in today’s continuously changing market as organizations strive to stay competitive. There are many different frameworks, with this thesis focusing on two popular ones: Business Process Management (BPM) and Lean. The implementations of these two in industry will be analyzed in relation to their theoretical descriptions to see how they differ and why.

A systematic literature review on implementation case studies together with a focus group interview with experts in the field have been conducted to gather data. The results of this study show that there are some common factors regarding the frameworks BPM and Lean found in the industry cases that are also highlighted by the experts and theory. For instance, importance of process ownership, visualization and flow, right behavior and culture, abstraction levels and domains. These factors should be considered and used as ground for other organizations that want to implement the frameworks but also for further research in academia.

K T H R O Y AL I N S T I T U T E O F T E C H N O L O G Y

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Sammanfattning

Ramverk för verksamhetsutveckling är av stor betydelse I dagens kontinuerligt förändrande marknad då organisationer strävar efter att vara konkurrenskraftiga. Av de många olika ramverken fokuserar denna studie på två populära: Business Process Management (BPM) och Lean. Implementationen av dessa i industrin kommer att analyseras i relation till deras respektive teoretiska beskrivningar, för att se hur de skiljer sig och varför. En systematisk litteraturstudie på fallstudier om implementationer samt en gruppintervju med experter inom området har utförts för att samla in data. Resultaten av studien visar att det finns flera gemensamma faktorer när det gäller ramverken BPM och Lean som hittades i fallstudierna, som även belyses av experter och teorin. Exempelvis, vikten av processägarskap, visualisering och flöde, rätt beteende och kultur samt abstraktionsnivåer och domäner. Dessa faktorer borde tas i hänsyn till och användas som grund för andra organisationer som vill implementera ramverken, men även för vidare forskning i akademin.

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Acknowledgements

Firstly, I would like to thank Ferrologic and in particular Per Torell for his support and ideas regarding this thesis. I would also like to thank my examiner and supervisor at KTH, Robert Lagerström, for his excellent support and constructive feedback. Finally, I want to thank my family and girlfriend who always supported me when I needed it the most.

Stockholm, April 2019 Soren Kavosi

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List of abbreviations ... 3 1 Introduction ... 4 1.1 Background ... 4 1.2 Purpose ... 5 1.3 Objectives ... 5 1.4 Methodology ... 6 1.5 Delimitations ... 6 1.6 Thesis outline ... 6 2 Theoretical background ... 8 2.1 Business Improvement ... 8 2.2 Lean ... 8

2.2.1 Lean tools and methods ... 10

2.3 Business Process Management (BPM) ... 13

2.3.1 The Six Core Elements of BPM ... 13

2.3.2 The BPM Lifecycle ... 14

2.3.3 Context framework ... 15

2.3.4 Methods and tools ... 16

2.3.4.1 Process identification ... 16

2.3.4.2 Process discovery ... 17

2.3.4.3 Process analysis... 17

2.3.4.4 Process redesign and implementation ... 17

2.3.4.5 Process monitoring and controlling ... 17

2.4 Related Work ... 18

3 Methodology ... 20

3.1 Systematic literature review ... 21

3.1.1 Defining the scope ... 22

3.1.2 Searching the literature ... 22

3.1.3 Assessing the evidence base ... 23

3.1.4 Synthesis and analysis of results ... 24

3.2 Focus group interview ... 24

4 Empirical results ... 26

4.1 Lean and BPM implementations - systematic literature review case studies ... 26

4.1.1 BPM ... 27

4.1.2 Lean ... 31

4.2 Lean and BPM implementations - focus group interview ... 33

4.2.1 BPM ... 33 4.2.2 Lean ... 34 5 Analysis ... 36 5.1 BPM ... 36 5.2 Lean ... 38 6 Discussion ... 40

6.1 Theory and practice ... 40

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2 6.1.2 Lean ... 43 6.1.3 Impact of findings ... 46 6.2 Methodology ... 46 6.3 Limitations ... 48 6.4 Future work ... 49 7 Conclusions ... 50 References ... 51

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List of abbreviations

5S Sort, Set in order, Shine, Standardize, Self-discipline

BPM Business Process Management

BPMN Business Process Management Notation

BPMS Business Process Management Suite

BPR Business Process Reengineering

CI Continuous Improvement

CSF Critical Success Factors

EA Enterprise Architecture

EPC Event-driven Process Chain

IT Information Technology

JIT Just-In-Time

KPI Key Performance Indicator

PDCA Plan-Do-Check-Act

SMEs Small and Medium-sized Enterprises

SPS Scania Production System

SWOT Strengths, Weaknesses, Opportunities and Threats

TOC Theory of Constraints

TPS Toyota Production System

TQM Total Quality Management

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1 Introduction

This section gives an introduction and overview of the thesis. It provides background information, the purpose and objectives of the study. It also briefly introduces the methodology used as well as states the delimitations. Finally, a thesis outline will be provided.

1.1 Background

Many organizations struggle with the task of staying competitive in today’s market, as success often is based on being able to adapt to a continuously changing world. New products and services, change of customer needs, reduction of cost and increase of profit are examples of changing prerequisites [1]. Improving business is thus crucial and there are different business improvement disciplines. One term that is strongly related to improving business is Enterprise Architecture (EA) which is a discipline for aligning business and IT within an organization [2]. One of the most important parts of EA is the focus on business improvement and business processes modelling [3]. In the early 1900s, Frederick Taylor published a set of ideas that he believed good managers should use in order to improve their business [4] [5]. The work enforced standardization of methods, measuring and rewarding output, work simplification etc. [5]. Around the same time span, Henry Ford, the founder of Ford Motor Company, introduced continuous production lines of the “Model T” car. Standardization, elimination of waste and the view of production as a flow or single process allowed for optimization and efficiency. Both Ford and Taylor created the foundation of future development in business improvement with one of the most obvious examples being one of the founders of Toyota and Toyota Production System who found inspiration in the work of Taylor and Ford. Toyota Production System (TPS) was crucial for the success of Toyota and a source of inspiration for Lean manufacturing as it was derived from TPS. Lean started in the 1990s as a manufacturing system with focus on minimizing waste but has with time evolved and is now seen as a philosophy and management discipline. Another management discipline that started to evolve around the early 2000s is Business Process Management (BPM). BPM has its roots in IT and is a discipline focusing on improving business processes. Both Lean and BPM are prominent management disciplines in the field of business improvement with many organizations implementing either or both in conjunction [6] [7] [8]. Although there is a lot of theoretical descriptions and academic work of the two frameworks, the actual implementations of BPM and Lean differ in industry. One cannot blindly follow a framework and its corresponding principles, values and methods, and believe that the organization will automatically improve. Every organization has different backgrounds and needs. One method working well for one company might not

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5 work for another. This becomes a difficulty for change management, which is the structured work of achieving change in an organization. Since we live in a continuously changing world with increasing demands on producing faster and achieving short term results, there is always the risk of management not giving business improvement projects and initiatives enough time and resources. Implementing BPM and Lean is not a quick fix, it is a way of working. Many implementations fail, one example being that organizations implement Lean since it is trendy and see it as a method, as described by M.Lord [9].

Looking at how and what is implemented in successful implementations of Lean and BPM is important, as it can act as evidence and inspiration for change management. What is being implemented and used in industry of all the theory that describes the different frameworks? Managers and management need knowledge and understanding, only reading theoretical descriptions of BPM and Lean is not enough.

1.2 Purpose

The purpose of this study is to examine how the business improvement frameworks BPM and Lean are implemented in industry. A literature review will be conducted to acquire theoretical knowledge about BPM and Lean. This will be useful as a reference when comparing implementations to theory. The purpose is also to sort out what business improvement really is, since it has a tendency of being misinterpreted depending on who you ask. Furthermore, this study has the purpose of analyzing research literature in the form of case studies on BPM and Lean implementations in industry through a systematic literature review. It is also of interest to analyze what consultants and experts in the field have to say about BPM and Lean implementations. This will be done through a focus group interview with experts.

The main emerging research questions this study should answer are as follows; • How are BPM and Lean implemented in industry compared to their

theoretical descriptions?

• Why are they implemented in the way they are? With the following sub-questions;

• How is research, in the form of case studies, describing BPM and Lean implementations?

• How do experts in the field describe BPM and Lean implementations?

1.3 Objectives

The objectives of this thesis are to;

• Provide a composition of case studies that have been made on BPM and Lean implementations

• Provide information on experts’ opinions on BPM and Lean implementations.

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6 • Provide ground to academics and industry in the knowledge of

implementing business improvement frameworks such as BPM and Lean

1.4 Methodology

A literature review was made to provide theoretical ground about BPM and Lean. Books, scientific papers, journals, websites and other sources of data was considered for review. A qualitative systematic literature review was conducted to gather data on cases on BPM and Lean implementations in industry. To complement, a focus group interview with seven experts in the field of BPM and Lean was conducted to provide another perspective and type of data. The study is of a qualitative approach since the goal is to understand how different frameworks (BPM and Lean) are implemented with regards to theoretical descriptions. More detail on the methodology will be provided in section 3.

1.5 Delimitations

The area of business improvement is wide, so this thesis only focuses on two frameworks (BPM and Lean). These two were chosen since they were the ones most relevant to the author due to previous encounters in work. This will be further described in the discussion of this study.

The thesis only looks at how BPM and Lean are implemented in a holistic view and gather data from other case studies (systematic literature review) and from experts (focus group interview) experiences. This limits the outcome of the results to other’s interpretations. The focus group interview participants are all from the same consultant company and the data gathered from them is based on their experience. Due to time constraints, only one interview was conducted. The analysis of how the results are related to theory is limited to the theoretical background, which is limited to what data is found in a literature review. The discussion of the results is delimited to the authors interpretation, but also experts from a focus group interview, books, papers and related work on the subject.

1.6 Thesis outline

The thesis is structured as follows;

Section 2 gives a theoretical background of business improvement and the framework BPM and Lean. The chapter ends with related work.

Section 3 provides information on the methodology used in the thesis. It begins with an overview, followed by specific details on the systematic literature review and finally the focus group interview.

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7 Section 4 illustrates the results from the systematic literature review and focus group interview in the form of tables.

Section 5 analyzes the results with respect to the theoretical background. Section 6 provides the discussion on the results, methodology, limitations and future work.

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2 Theoretical background

This section describes the theoretical background of this thesis. First, the definition and interpretation of “business improvement” will be described. It will then be followed by the theoretical descriptions of Lean and BPM.

2.1 Business Improvement

In today’s market, organizations are required to continuously improve their way of working in order to stay competitive. Being able to adapt to change thus being flexible is essential to continuously improve. Improving an organization’s way of working is strongly related to improving its processes, since all organizations manage processes in one way or another [10]. A business process can be in the form of a product assembly, invoicing or billing, a governmental service etc. [11].

There are different formulations and definitions of improving business in an organization in the form of performance;

• Business Improvement [12]

• Business Improvement Discipline [8] • Process Improvement [13] [14] [15]

• Business Development and Process Improvement [16] • Process Excellence [17]

• Operational Improvement [8] • Improvement Methodologies [18]

What they all have in common is that they imply on the improvement of business and processes. There are different ways of improving business and processes, but this study will only focus on two specific disciplines that are well-known in industry [8] [18]; Lean and Business Process Management (BPM). One common interpretation is that BPM focuses on an organization holistically with the view of process, people and technology, acting as the glue between business and IT. Lean is often viewed as a practice of improving processes by reducing waste [7] [19] [8] [18]. Although there are interpretations of Lean being more of a culture and way of thinking [9].

The following sections will describe the theory behind both Lean and BPM.

2.2 Lean

Lean is a discipline focusing on minimizing waste in order to maximize customer satisfaction and value. M.Lord [9] describes Lean as a way of working or a culture, not misinterpreting it for a project or method.

“Lean” is the western term used to describe the Japanese manufacturing approach Toyota Production System (TPS) that is derived from the automotive manufacturer Toyota Motor Corporation. It has been a cornerstone for the success of Toyota, who is a leader in automobile manufacturing in terms of market shares and overall sales [20] [21].

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9 Building a Lean culture requires that you follow the Lean relations, which consists of values, principles, methods and results [22]. The values of an organization are important when it comes to developing in the right direction. Toyota has two essential and well-known values: respect for people and continuous improvements.

Lean has two main principles;

• Just-In-Time (JIT), in other words: deliver just what is needed, just when it is needed, in just the amount needed. In a way it is about creating a flow. Thinking of it as an example in the form of football, the flow is the process of transporting and dribbling the ball from one side of the pitch to another and finally scoring a goal. The ball is constantly moving and all team members collaborate [23].

• Jidoka, also known as automation, is the principle of delivering high quality and on time. Using the example of football again, the players can see the whole pitch, all the players, hear the referee etc. These are necessary to get an overview and making decision based on that. In organizations, the football field is often divided in smaller tents where players just kick the ball out from their own tent instead of looking at the broader picture and no one hear the referee whistle to stop the play [23]. These are the two pillars of the explanation model for Lean, as seen in Figure 1 [22]. These two in turn consists of five principles:

• Takt Time – a principle that supports an organization’s processes to have the same tempo as the customer need.

• Continuous Improvement – the pursuit to constantly process and improve information, products and material in order to increase flow efficiency.

• Pull System – new work is only started when there is a customer demand for it.

• Built in Quality – doing the right thing in the beginning of a process or activity. Automation of monitoring and governance of processes is an example.

• Line Stops – stopping, or at least reacting, when something goes wrong.

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Figure 1 - Explanation model for Lean.

Over time, the principles of Lean have been interpreted in different ways and evolved. J.Liker and M.Morgan summarize the Lean product development framework as the following 13 guidelines, building on the principles described earlier [24]:

1. Establish customer-defined value to separate value-added from waste. 2. Front-load the product development process to explore alternatives

thoroughly.

3. Create a leveled product development process flow.

4. Create flexible and predictable outcomes by utilizing rigorous standardization to reduce variation.

5. Develop a chief engineer system to integrate development.

6. Organize to balance functional expertise and cross-functional integration.

7. Develop towering technical competence in all engineers.

8. Fully integrate suppliers into the product development system. 9. Build in learning and continuous improvement.

10. Build a culture to support excellence and relentless improvement. 11. Adapt technology to fit your people and processes.

12. Align your organization through simple and visual communication. 13. Use powerful tools for standardization and organizational learning.

2.2.1 Lean tools and methods

As mentioned earlier, Lean consists of different relations; values, principles, methods and results. An organization’s values and principles are the

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11 foundations of determining what Lean methods should be used to reach the preferred results. There are several different tools and methods provided by Lean and some of them will be described below [22].

Plan-Do-Check-Act (PDCA)

PDCA is a method for change management and continuous improvement that implements a cyclic approach to gain structure. There are four phases in the cycle [25];

1. Plan. This phase is not only about planning what needs to be done, but also identifying the needs, collecting data, analyzing problems and identifying the root cause of the problems. A method supporting the identification of root cause is 5S which is described later in this section. 2. Do. Actual implementation of what has been decided in the Plan-phase. 3. Check. Evaluation of the implementation. Analyze both successful and

failed implementations, what can be learned from them?

4. Act. With the new knowledge gained, standardize and improve the process or implementation. If needed, restart the cycle again.

5S

5S is one of the most well-known Lean methods due to its simple implementation. The purpose of 5S is to create a well-organized and functional organization, but it can also be described in simpler terms as having the right things at the right place [23]. There are 5 phases, all starting with the letter “s”, that help creating a safe and efficient workplace [22];

• Sort. Sorting the workspace, thus encouraging frequently used items and tools and removing unnecessary ones, supports the general intelligibility.

• Set in order. Optimizing the placement of items and tools in order to shorten the time spent searching for them.

• Shine. Making sure that everything is working as it should and that all is in order.

• Standardize. Committing to the work done in the previous phases through standardization.

• Self-discipline. Making sure that everyone follows the agreed standards. This is usually the most important and difficult phase. Kanban

Kanban, literally meaning “card you can see” or “label” [26] in Japanese, was first implemented by Toyota line-workers. The approach is to visualize with cards what work need to be done and when [27]. It is a way of increasing communication and collaboration as well as limiting unfinished work that is in process. Having a physical Kanban board is preferable since a board evolves and often changes structure. It also allows for physical interaction by the ones using it allowing for easy access and visibility, as described by Kniberg [28].

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12 A3

The A3 method is an approach that has evolved from not only being a surface of problem-solving template but also a way of scoping whole projects [29]. The A3 surface contains structured and standardized documentation on PDCA improvement and can be used by teams and leaders. It is a powerful way of guiding practitioners through the process of improvement work since it is continuously changing and contribute to standardized documentation [22]. Value Stream Mapping (VSM)

Value Stream Mapping (VSM) is a method with the purpose of improving flows by having a bigger picture view instead of focusing on separate processes. It can assist with waste identification and reducing process cycle times [30]. VSM is usually performed in three steps;

1. An as-is state of the flow is derived from analysis

2. An improved to-be state is defined with the help of Lean principles (e.g. reducing waste)

3. An action plan is created to fill the gaps between the as-is and to-be state; what needs to be done, who is responsible and when should it be done.

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2.3 Business Process Management (BPM)

Jeston and Nelis [31] describe Business Process Management (BPM) as “The achievement of an organization’s objectives through the improvement, management and control of essential business processes.”. BPM should not be misinterpreted as a product or technology. It is a collection of technologies, tools and methods used for the management of business processes.

There are different perspectives on BPM. Viewing it as core elements (section 2.3.1), as a lifecycle (section 2.3.2) and as an initiative (section 2.3.3).

2.3.1 The Six Core Elements of BPM

In order to get a comprehensive view of what BPM is, vom Brocke and Rosemann [32] describe six core elements that collaborate in giving a good understanding. These elements are illustrated in Figure 2 and can be summarized as the following;

• Strategic Alignment: The overall strategy of an organization is important, thus requiring BPM to be aligned with it. The link between organizational priorities and processes is crucial to business performance improvement. This requires processes to be properly designed, executed and measured according to the given priorities and specific situations.

• Governance: Roles and responsibilities for different levels of BPM must be transparent for the whole organization. The process of decision-making must also be clear as well as collecting metrics from processes and linking them to performance criteria.

• Methods: Tools and techniques used for managing activities along the process life cycle. Process analysis and modelling techniques are common examples, e.g. the BPM approach Six Sigma that has a set of integrated BPM methods for process improvement.

• Information Technology (IT): IT plays a significant role in the implementation of BPM as it relies on process modelling, mining, simulation, monitoring, etc.

• People: People are the resources implementing the processes and IT systems and it is thus important for them to have the qualifications and expertise with relevant business processes. Business processes improve by continuous process management by people.

• Culture: The organizational culture must be receptive to BPM initiatives. The collective values and beliefs must comply with BPM in the form of process-related attitudes and business performance.

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Figure 2 - The six core elements of BPM, vom Brocke and Rosemann [32].

2.3.2 The BPM Lifecycle

The process improvement model in BPM can be described as a lifecycle. A project or initiative can reach an improved process by following the steps in the lifecycle. There are different notations and layouts used to describe the lifecycle, one excellent representation can be found by the works of Dumas et al. [10]. There it is described as the following continuous 6 steps (as seen in Figure 3);

1. Process identification – Relevant processes to an identified problem are identified. A new or updated process architecture is derived from the identification, showing the current state of the organization. This architecture assists in choosing which processes to manage in the coming phases of the cycle.

2. Process discovery – The current state (as-is) of the relevant processes are modeled and documented.

3. Process analysis – Weaknesses related to the as-is processes are prioritized and their corresponding impacts are documented, using performance measures, also called Key Performance Indicators (KPIs). 4. Process redesign – An improved (to-be) model is developed based on

the rework of improved processes. Performance measures from the previous phase helps with the analysis and comparison of changes. 5. Process implementation – Changes required to evolve from the

as-is state to the to-be state are performed. Thas-is includes both organizational change management and IT-system development in the form of process automation.

6. Process monitoring and controlling – relevant data from how the processes are performing are continuously collected and analyzed. Deviations, bottlenecks or recurrent errors will trigger new issues and thus new iterations of the lifecycle.

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Figure 3 - The BPM Lifecycle, Dumas et al. [10].

2.3.3 Context framework

Vom Brocke et al. [33] describe a framework for BPM initiatives, called The BPM Context Framework (see Figure 4). There are different factors based on dimension. A BPM initiative can for example have the goal of either optimizing or innovating. The process characteristics could differ in the form of being a core process, a management process or support process. There are many factors in a BPM initiative that can have different characteristics, showing that implementing BPM can differ a lot.

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Figure 4 - The BPM context framework, vom Brocke et al. [33].

2.3.4 Methods and tools

There are various methods and tools under the BPM framework that assist in the different phases of the BPM lifecycle. Dumas et al. [10] describe some of them in their work. The following subsections will follow the structure of the work of Dumas et al. [10] when describing some examples of BPM methods and tools.

2.3.4.1 Process identification

This phase has the purpose of providing a process architecture that defines the scope and priorities of process redesign. Categorizing and prioritizing an organization’s processes in the form of a process portfolio is a way to represent

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17 the process landscape. One way of categorizing a process is to decide if it is a core process (essential to value creation), management process (providing directions and rules) or support process (enables execution of core processes), as seen in Figure 4.

2.3.4.2 Process discovery

Gathering information about processes can be done in three different ways; • Evidence –It could be documents or policies describing how to perform

certain processes. It could also be observations of end-to-end processes. This has the advantage of revealing how a process is performed since there could always be deviations from policies and documents. Finally, the evidence can also be automated by capturing event logs.

• Interviews – Actually interviewing experts that perform processes is another way to gathering information.

• Workshops – With workshops one can allow flowing discussions between several participants of processes. Physical notes and stickers can easily be discussed and modified providing information for process discovery.

2.3.4.3 Process analysis

Lean, with waste analysis and bottleneck analysis, is one way of analyzing processes. Value-added analysis is another way to see in each step of a process if there is value or not, thus providing feedback on what steps to eliminate. Analyzing business can be made by SWOT (Strengths, Weaknesses, Opportunities and Threats) and stakeholder analysis, for example.

2.3.4.4 Process redesign and implementation

A Business Process Management Suite/System (BPMS) is a tool that allows actual implementation and modelling of processes. Appian1_{and Software AG}2

are examples of BPMS. Within the BPMS, modelling languages such as Business Process Management Notation (BPMN) or Event-driven process chain (EPC) can be used.

2.3.4.5 Process monitoring and controlling

With the help of BPMS there are possibilities to monitor processes in the form of dashboards. Charts of process utilization and other characteristics allow numerous possibilities of understanding performance of processes. There are also techniques that provide process mining, meaning that processes can be measured in time, cost, etc.

1_{https://www.appian.com/platform/bpm-suite/} 2_{https://www.softwareag.com/resources/BPMS}

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2.4 Related Work

A very good example of a systematic literature review, in the field of business improvement, is the work of Hu and Mason [34]. They looked at Lean implementations in small and medium-sized enterprises (SMEs) and focused on four main themes that where identified in the literature;

• The scope of Lean being adopted • How Lean was implemented in SMEs

• The impact of Lean implementation on SMEs

• Critical success factors (CSFs) of Lean implementations in SMEs

Their work critically evaluated themes of Lean implementation within SME environments, thus providing a road map for other SMEs who intend to implement Lean, as well as providing an agenda for future research for the academic community.

Looking at BPM, Syed et al. [35] recently (2018) conducted a systematic literature review on critical success factors of BPM project in the public sector. They discussed and compared private sector versus public sector as well as developing countries versus developed countries when it comes to CSFs in BPM projects. The main results in their study where the identified CSFs and their similarity to generic and private sector context CSFs.

There are some aspects in which this study differs from the above-mentioned related work. None of the related studies focused on both BPM and Lean, and this was also the case for all related work that was searched. Also, none of the mentioned work focused on the theoretical background of BPM and Lean. Syed et al. [35] only focused on BPM CSFs while this study look at implementation. Hu and Mason [34] are more similar to this study but they only look at Lean and only on SMEs while this study includes BPM and large enterprises.

There are however a few interesting studies on BPM and Lean implementations that are not systematic literature reviews that look at the comparison of theory and practice;

• “BPM in Practice: Who Is Doing What?”, by Reijers et al. [36]

• “Understanding business process management: implications for theory and practice”, by Smart et al. [37]

• “Business process perspectives: Theoretical developments vs real-world practice”, by Vergidis et al. [38]

• “Lean manufacturing: theory and practice”, by Čiarnienė and Vienažindienė [39]

• “The Value of Lean in the Service Sector: A Critique of Theory & Practice”, by Arfmann et al. [40]

These will be further described and used as input in the discussion as they are highly relevant.

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19 Another interesting aspect to consider when looking at related work is EA. As mentioned earlier, it is strongly related to BPM and Lean. They have similar focus on improving business and processes. There are many interesting related works regarding analyzing IT and business alignment [41], visualizing and measuring EA complexity [42].

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3 Methodology

The thesis methodology can be illustrated as Figure 5 below. The yellow rectangles indicate activities while the blue ones indicate output. A thesis literature review was the methodology used to retrieve theoretical background on BPM and Lean. This theoretical background was then used as input and ground for the systematic literature review and focus group interview.

A stand-alone literature review that is conducted systematically is called a systematic literature review [43]. This was the approach implemented in this study to retrieve information on case studies of BPM and Lean implementations, which will be further discussed in section 3.1.

The focus group interview, which will be described in section 3.2, provided qualitative data on what experts has to say on BPM and Lean implementations. The empirical results from the systematic literature review and focus group interview where compiled into tables (information on cases) and documents (citations from the focus group). This was then used as input for the analysis where relations between the theoretical background and empirical results were made. Finally, a discussion of the analysis was conducted.

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Figure 5 - Methodology steps

The following sections will further describe the implementations of the systematic literature review and focus group interview.

3.1 Systematic literature review

A systematic literature review is a systematic approach to gathering data relevant to a research question. In this thesis, the process of analyzing BPM and

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22 Lean implementation case studies was performed by implementing a systematic approach. Why reviewing literature should be done systematically is well described by Booth et al. [44]. They have identified three reasons;

• Clarity. Having a clear structure and explicit search strategies helps with the understanding and navigation over the review’s content. • Validity. The content must be defensible against potential bias, thus

putting emphasis on internal validity.

• Auditability. Conclusions made by the reviewer’s must not be fabricated to support prior conclusion. Having conclusions grounded by data retrieved from the review process is preferable, thus having an emphasis on transparency.

The systematic approach can differ depending on what kind of review is to be conducted. There are different approaches to searching, synthesizing and analyzing data. This study is of the type “Qualitative Systematic Review” since it compares and integrates qualitative studies and looks for themes.

There are different steps in the systematic literature review methodology [44]; 1. Defining the scope

2. Searching the literature 3. Assessing the evidence base 4. Synthesizing included studies 5. Analyzing the finding

6. Writing up and presenting date

How these steps have been implemented in this study is described in the following subsections.

3.1.1 Defining the scope

To define the scope, and focusing the research question, answers to who, what and how must be decided. (1) Who is the research question about, (2) what must be found out to answer it and (3) what is the outcome [44].

The research question for the systematic literature review was “How are BPM and Lean implemented in industry compared to their theoretical descriptions?”, as described in section 1.2. With regards to the questions stated above, the answers were;

(1) Organizations

(2) Implementations of BPM and Lean

(3) Difference between implementation and theory 3.1.2 Searching the literature

There are different stages of searching the literature [44] and some of them were implemented in this study. The first stage was to scope the search by identifying which databases to use and what key terms to search for. Google

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23 Scholar3_{and the KTH Library search tool Primo}4_{were the databases used. The}

key terms used to search where: “case study”, “case”, “implementation”, “business process management” and “lean”.

The following stage was to conduct a search strategy based on the key terms. This was made by implementing the free text search with the help of Boolean operators (OR, AND, etc.). The search results became very big, with over 600 000 results for Lean and 60 000 results for BPM. As mentioned earlier, this study had the approach of a qualitative systematic review. Thus, the review was not completely exhaustive, instead it implemented selective and purposive sampling [44]. Not every single search result was analyzed due to their size, only about the first 50 search results for each search strategy was analyzed. In the case of Lean, the filter of only Swedish-written reports where applied due to the huge amount of results.

3.1.3 Assessing the evidence base

The next step was to assess the search results. Having inclusion criteria facilitate the process, thus the following criteria was defined:

• Background of company • Implementation of BPM/Lean • Tools, methods and techniques used

The process of selecting the relevant studies then followed the sifting procedure described in Figure 6. First, the subject of the study was analyzed. If it seemed relevant, the abstract was then analyzed. Depending on if the abstract contained information about the inclusion criteria, the whole text of the study was then analyzed. Since the study followed a qualitative systematic literature review, this process of selecting studies for inclusion in the review was selective and no documentation of the reason for excluded studies was taken.

Some of the included studies contained multiple cases, and the total number of cases was a bit too high for a qualitative study (see Table 1 in section 4.1). Due to this, a final number of cases were chosen in a qualitative manner, picking the ones matching the most with the inclusion criteria. In the case of the Lean search, a filter was applied to further narrow the search since the number of results were too big.

3_{https://scholar.google.se/} 4_{https://www.kth.se/en/kthb}

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24

Figure 6 - Process of selecting studies, Booth et al. [44]

3.1.4 Synthesis and analysis of results

Synthesizing the included studies in a qualitative manner required extraction of key concepts against themes, with the themes being background, implementation, methods, tools and techniques. This was done by extracting data in tables, having cells containing free text, as it is qualitative data (see section 4).

After the synthesis, the gathered data was analyzed and compared to the theoretical background (see section 5).

3.2 Focus group interview

A focus group interview is a qualitative data collection technique [38] and was conducted in this study to get another perspective of BPM and Lean implementations, other than the perspective given from the systematic literature review. The main advantage of focus group interviews, as Morgan [45] describes, “is the opportunity to observe a large amount of interaction on a topic in a limited period of time based on the researcher’s ability to assemble and direct the focus group sessions.”. Another advantage of a focus group interview compared to a semi structured interview with only one participant is that discussions occur. Instead of getting one answer, the focus group discussions excel one answer and fully discuss it from different perspectives. The person giving an answer is forced to describe the answer more explicit when faced with counter-answers.

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25 The focus group interview implemented in this study was conducted in an hour with 7 consultants from the consulting company Ferrologic5_{. The consultants}

had expertise in both BPM and Lean after multiple years of experience working with implementations of BPM and Lean in different organizations. They had the roles of enterprise designers and business developers.

The questions asked were open-ended to promote the generation of qualitative data. For both BPM and Lean, the question of how they are implemented in organizations was asked as an initiator, and from there, the discussions exceled. The whole interview and its transcript were performed in Swedish, since it was the native language of the consultants and the moderator of the interview and can be found in Appendix A. Extracts from the interview were however translated to English, as will be seen in the following sections. Not everything that was documented in the interview will be found in the results or the analysis of the thesis since there were open discussions that did not follow a strict protocol. Some of the discussions resulted in examples of cases which was used as data in the results (see section 4.2) and other discussions resulted in data used as ground in the analysis (see section 5).

Looking at potential risks and weaknesses of the focus group interview, there is always an ethical aspect of recording an interview. The participants maybe held back certain sensitive information. For example, no specific company name was outed, they were instead anonymous. Another risk concerning the interview was that some participants talked more than others, maybe due to them having more to say in the issue, but it could have caused reserved individuals to hold back. One more risk that one could point out is the fact that all the consultants where from the same consulting company and might have caused them to have the same views on BPM and Lean. This was however not an issue since they had different experiences and clients that they have worked with, together with the fact that the views on BPM and Lean differed in some ways between the consultants.

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26

4 Empirical results

This section presents all the empirical findings of the study. These results are then analyzed in section 5. Section 4.1 illustrates the findings from the systematical literature review in the form of tables. Cells marked with a “-” indicates that information could not be found in the systematic literature review. This applies to all tables in section 4.

Section 4.2 summarizes the BPM and Lean implementations that were provided by consultants in the focus group interview.

4.1 Lean and BPM implementations - systematic literature review case studies

Table 1 illustrates the sources of all cases found in the literature review. Each row corresponds to a type of case study, either being a book or report. The table also provides information on what type of implementation (BPM or Lean) the case was about, how many cases each case contained (Number of cases), which case numbers they have in my study (Case #) and from what database they were found (Database).

There were many cases (31) found in Vom Brocke and Mendling [46], thus only 4 of them were chosen to keep the number of total cases adequate for a holistic qualitative literature review. The 4 cases were chosen as the ones with the most relevant information based on the themes mentioned in section 3.1.4, after briefly reading through all the 31 cases introduction texts.

A significant amount of cases on Lean implementations in Scania were found. 3 cases of this kind were chosen and combined into one mutual case, case 9, since they had so much in common.

Case 3 and 6 were both made on the company Siemens. However, they differ in authors and date published (case 3 published 2017 and case 6 published 2009) which. These are factors that might show that even though it is the same company, the cases might differ. Thus, both are included as separate cases.

Table 1 - Summary of literature review cases

Reference BPM or

Lean Case # Number of cases Database

Vom Brocke and Mendling [46]

BPM 1-4 31 Google Scholar

Harmon [47] BPM 5 1 KTHB

Rohloff [48] BPM 6 1 KTHB

Jeston [31] BPM 7 1 KTHB

Schnediers and Veem [49]

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27 Tabib and Awrohum

(Scania) [50] Lean 9 1 KTHB

Granath et al. (Scania) [51]

Lean 9 1 KTHB

Ahrén and Buhlmann

(Scania) [52] Lean 9 1 KTHB

Sandberg et al. [53] Lean 10-12 3 Google Scholar

Drotz [54] Lean 13 7 Google Scholar

Choukeir and Papadopoulos [55] Lean 14 1 KTHB Gignell [16] Lean 15-17 3 KTHB Engblom [56] Lean 9 2 KTHB de Bruin [57] Lean 18 1 KTHB

The following sub-sections will provide detailed information of the cases regarding background, implementation, methods, tools and techniques.

4.1.1 BPM

Table 2, describes the BPM cases’ background information. It presents what type of company it is in terms of branch of industry and size. An explanation of the potential problems of the company and purpose of implementing BPM is also included.

Table 2 - BPM cases, background

Case

# Type of company Purpose and problems

1 Telecom company The company needed to improve customer satisfaction and internal efficiency (shorten lead times). They had silo-oriented process

management. Several BPM initiatives, managed as projects, started for a strategic

transformation. 2 Public sector

organization Badly organized processes, non-integrated IT solutions, excessive work and delays. They decided to adopt BPM and transform.

3 Large and global electronics company

Different sectors on the company had

disconnected processes and conventions. A BPM initiative on organizational level was needed. 4 Insurance

company

Incoherence and unclearness of procedures and fundamental concepts.

5 Hypothetical case study with

characteristics of several companies

Want existing processes to be more consistent and smoother.

6 Large and global electronics company

The IT landscape and processes had evolved differently in units over the years. A BPM initiative was started with the purpose of

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28 increasing effectiveness and efficiency of all processes.

7 Large financial institution

Management decided to move the organization to a process-centric view.

8 Large and global automotive manufacturing company

They wanted to reorganize from a traditional organization to a matrix organization. They also wanted process orientation to increase

collaboration and create a solution-driven culture. Purpose of BPM initiative is reduction of cost and increase of quality.

Regarding implementation of BPM, Table 3 below describes how the different cases implement phases and what is done in each phase.

Table 3 - BPM cases, phase implementation

Case #

Phases Phase implementations

1 1. BPM Diagnostics 2. Design, implementation and improvement 3. Monitoring and handover

1. Identifications and prioritization of pain points and counter measures. Define process ownership and alignment with strategic targets

2. Development and implementation of central BPM department, process framework and definition of roles, policies, training templates and tools. Employee training, process descriptions etc.

3. - 2 1. Strategic business planning 2. Business process transformation and information architecture development 3. Information system development

1. Specify goals, rules, Critical Success Factors, etc. Determine organization direction and actions needed to improve performance. 2. Produce As-is models in iterations validated

against simulations. Produce To-be models and analyze efficiency.

3. Data modelling and database design

3 1. Identify business process owners 2. Nominate process

●

” sign indicates that the method, tool or technique was mentioned and described in the case. Empty cells, on the other hand, indicates that they were not mentioned. The methods, tools and techniques were either mentioned or not mentioned. The degree of how much detail there was could not be extracted since the study had a holistic approach, thus leaving out the option of half-full signs.

Table 5 - BPM cases, methods, tools and techniques Case

# Workshops BPMN ARIS KPIs Process owners As-is modelling To-be modelling

1

_●

2

_●

3

_●

4

_●

5

_●

6

_●

7

_●

8

_●

The use of BPMS such as ARIS as a common repository for process models were mentioned in case 1, 3 and 6. Since both case 3 and 6 are about the same company, it shows that only 2 different organizations implemented ARIS. No other mentioning of specific BPMS were found but the assumption is that most of them implemented a BPMS since it is required in BPM. There were other methods, tools and techniques than those described in the table above. Business model canvas, strategic roadmaps, process landscape and portfolios, bottleneck

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31 analysis and many more were described but not included in the table due to their spread across the cases and low occurrence.

4.1.2 Lean

Just as described in section 4.1.1, the table below contains information about the cases’ background, but with these cases being about Lean.

Table 6 - Lean cases, background

Case #

Type of company Purpose and problems

9 Large, global manufacturing company

Problems within the organization. Relatively low turnover with many resignations each year and generally low motivation.

10 Police department,

public sector. Wanted to improve quality in processes and work environment (reduce stress). 11 Swedish migration

board, public sector Wanted to improve business and shorten office turnaround time 12 Swedish National

Agency for Higher Education, public sector

Wanted to shorten office turnaround time.

13 Public sector

organizations Most of them wanted higher efficiency and better structure. 14 European fuel retailer No structure or systematical thinking in stations. 15 Global manufacturing

company Wanted to increase profitability of the product development process 16 Large, global manufacturing company Inspired by Toyota. 17 Global company working with technology solutions.

Started Lean to save a product family in the product portfolio.

18 Affiliate of the Swedish power company Vattenfall, governmental.

Management together with external consultants realized that they needed business improvement and change of leadership, culture and way of working. Table 7 provides information of how the cases described their implementations of principles and values of Lean. Case 10, 11, 12 and 14 did not mention principles and values, thus they are excluded from the table. There were also other principles and values spread out across single cases not included in the table. Case 13 mentioned delayering (reduction in number of levels of management), case 15 described shorten project lead times (which could be categorized as waste elimination). Businesslike acting, Well-established decisions, Commitment and job satisfaction were all mentioned in case 16. Case 17 described Knowledge, Discipline and trust, and Flow. And finally, case 18, with the least common principles and values compared to the others,

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32 mentioned Cooperation, Security and Accomplishment. They also mentioned that they did not fully implement the 14 principles of Lean but strived for them.

Table 7 - Lean cases, common principles and values Case

# Customer focus CI Respect Standardization Eliminate waste Right from me Frontloading 9

_●

13

_●

15

_●

16

_●

17

_●

18

_●

Implementation information other than principles and values were also found in most cases. For example, case 9, which is a collection of 3 cases on Scania, mentioned the Scania Production System (SPS) House. This was the cornerstone of implementations describing all principles and values. Some leadership-specific principles were also mentioned:

• Co-ordinate but work independently – take responsibility. • Work with details and understand the context.

• Act now – think long term.

• Build know-how through Continuous learning. • Stimulate commitment through involvement.

In case 10, it was described that one person oversaw the Lean introduction and implementations of “Lean games” helped with explaining Lean to management.

Case 11 described a very positive approach to Lean as management was supportive, thus providing top-down approach of Lean. Case 12 on the other hand described that Lean was only implemented in a specific department int the organization. They did however standardize and improve communication within the department.

In case 14 there was focus on Lean training and education/e-learning. They also described how waste elimination was improved by structuring stations. Just as with the BPM cases, some Lean cases (case 11, 12 and 18) mentioned the help of external consultants when implementing Lean. In case 12, the external consultants initiated and enlightened the implementation. In case 14, external consultants had produced additionally 4 principles; Like deviations, Deliver on time, Work standardized and Learn and improve, but these were not implemented. In case 10 they had explicitly mentioned that no external consultants were used, instead they had implemented internal education on Lean.

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33 Finally, Table 8 summarizes different Lean methods, tools and techniques implemented in the cases.

Table 8 - Lean cases, methods, tools and techniques

Case

# 5S Visual management VSM Pulse meetings A3 PDCA 5 Why JIT

9

_●

10

_●

11

_●

12

_●

13

_●

14

_●

15

_●

16

_●

17

_●

18

_●

4.2 Lean and BPM implementations - focus group interview

This section contains extracts from the focus group interview that was performed in conjunction with this study. As mentioned in section 3.2, the full interview contained a lot of information but not all is relevant for this section. Thus, extracts that are relevant will be presented. The following examples are actual descriptions of different implementations of BPM and Lean in organizations in Sweden.

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34

Table 9 - Focus group cases, BPM

Case

# Implementation

19 A telemarketing company had a lot of orders but almost no deliveries. All orders where wrong so they got sent to the sales department who in turn could not open and edit orders so they in turn created new orders. This was a bad loop generating orders. The focus was only to sell and the volume of orders. It is important to know what you are measuring. They solved the problem when they realized they measured the wrong thing. This was an example of when BPM thinking with the method of measuring the right thing helped.

20 Many clients in pharmaceutical and finance implement BPM, where it is important to have strict steps in processes and standards.

21 A lot of global multinational corporates implement BPM in their way of thinking. There is control on processes going upwards when being approved and there should not be deviations in processes since you need to scale.

4.2.2 Lean

Table 10 - Focus group cases, Lean

Case #

Implementation

22 A pharmaceutical company got help from another company that successfully implements Lean. They started in one department and successfully streamlined, resulting in termination of redundant personnel. The other departments where not interested in implementing Lean since they did not want to lose their jobs. There was a lack of respect for people in their values. People are the most important asset, understanding this is crucial in implementing Lean. 23 In a finance company they implemented Value Stream Mapping (VSM). Their personnel started to get worried of losing their jobs but got calmed down by management who told them that the purpose of VSM was for them to not having to change locals. The culture in a company must be ready for other ways of thinking.

24 A telecom company implemented root cause analysis when incidents occurred. They continuously built in the organization how to handle incidents and after a couple of years they could solve incidents without having to solve the incidents in emergency meetings. They planed their work from the bottom.

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35 25 In a telecom company, the employees took courses on 5S. For

example, they learned how to clean up their mailbox etc. But this did not result in much. Then, in relation to a project, they saw how slow a certain process was. This process was in contact with different units and in one unit they had optimized their own function with Kanban etc. and a certain task took 2 min. But in relation to the process it took 10 weeks. Even though they had optimized their part the bigger process was a bottleneck. This showed that it is important to look at the bigger picture and not just your own unit.

26 A global manufacturing company have a large repository but in comparison to other companies, they have relatively few processes in the repository. Processes thinking is already in their DNA, so they feel no need to model it. Instead they have a lot of information and systems in the repository. This works well for them.

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36

5 Analysis

This section will analyze and compare the results from the previous section with the theoretical background of BPM and Lean. Both results from the systematic literature review and the focus group interview will be related to theory.

5.1 BPM

As found in Table 2, most of the companies were large, with some also being global also, and all of them were successful initiatives or transformation programs. All this together with the types of the companies (financial, telecom etc.) conforms with the focus group interview;

“A lot of BPM is found in global multinational corporate thinking”.

“Many clients in pharmaceutical and finance, where it is important to have strict steps in processes and standards”.

Improving customer and employee satisfaction, increasing efficiency of processes and moving towards a more process-oriented view seemed to be the general purpose of implementing BPM. Some cases (case 4,5 and 19) viewed BPM from a technical perspective and used it as a business system to improve processes. All other cases viewed BPM as a governance system as well, looking at how BPM could help achieve strategic goals. This is confirmed by the consultants from the focus group interview who said;

“There are different views on BPM. Some see it as a way to implement business systems and improve certain processes. This is the technical part of BPM. Others see BPM as a way to look at their business. How you do (processes) to reach your goals”.

“BPM is a governance system. It is not only about optimizing processes”. Another interesting finding in section 4.1.1 is that some cases (case 2, 4 and 5) mentioned help from external consultants in their implementation of BPM. This is something that the theory of BPM supports, with one great example being the work of Jeston [31], who mentions that external BPM experts, who mostly have experience and knowledge, can help organization in their BPM maturity by educating and helping the internal staff. This is also supported by the experts from the focus group interview, as they all had the role of external consultants supporting clients in their BPM/Lean implementations.

Most cases implemented BPM in phases, with different number of phases and implementations (see Table 3). As mentioned in section 2.3.2, the theoretical framework of BPM mentions the phases:

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37 2. Process discovery

3. Process analysis 4. Process redesign

5. Process implementation

6. Process monitoring and controlling

Based on the theoretical descriptions of the different phases and what was found in the systematic literature review, a table has been produced highlighting which phases where mentioned in the different cases. This is presented in Table 11 below. Some interesting findings from this table is that process discovery and implementation are well represented while process monitoring and controlling is not. Vom Brocke and Mendling [46] made a similar comparison, where they analyzed 31 cases and concluded that most cases addressed process redesign (8 cases), process discovery (6 cases) and process implementation (5 cases). The phases which least cases addressed where process monitoring (2 cases) and process analysis (2 cases). In comparison, the results in Table 11 also showed that process discovery and implementation are well represented while process monitoring is not.

Table 11 - BPM phases in the cases Case

# Identification Discovery Analysis Redesign Implementation Monitoring

1

_●

2

_●

3

_●

4

_●

5

_●

6

_●

7

_●

8

_●

Case 1, 3, 6 and 8 all mentioned working with process domains in the form of having core processes, management processes and support processes (see Table 4). This categorization and structure of processes is something that is described in theory (see section 2.3.3) as context framework. Processes have different characteristics and being able to categorize them helps with understanding the process landscape in whole. This is also an important method in the process identification phase of BPM, as described in section 2.3.4.1.

One method that was mentioned in a few cases (case 1, 3, 7 and 8) in Table 5 was the assignment of process ownership. Having a process owner that is responsible for planning and organizing a process is something that is crucial. Dumas et el. [10] describe that a process owner is responsible for initiating and leading process improvements as well as making sure that the process normally runs problem-free.

Theory and real-world practice

Theory and real-world practice

SOREN KAVOSI

Abstract

Sammanfattning

Acknowledgements

Table of Contents

List of abbreviations

1 Introduction

2 Theoretical background

3 Methodology

4 Empirical results

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