BUSINESS PROFILE: COMPUTER AIDED PROCESS IMPROVEMENT (CAPI)

"BPR is dead. Long live BPR!" That is the message of Gregory A. Hansen, author of Automating Business Process Reengineering: Using The Power of Visual Simulation Strategies to Improve Performance and Profit, and progenitor of automated business process reengineering, for which he coined the term Computer-Aided Process Reengineering (CAPRE™ - pronounced "KAY pur"). So, it would be more accurate to say, "BPR is dead. Long live CAPRE!"

Hansen contends that TQM is dying and BPR will suffer the same fate if the tools and techniques used in process reengineering aren't changed. Current practices only take tasks into account, and are based on subjective cause-and-effect analysis, Instead, Hansen argues, the entire system must be addressed and causal relationships within the system must be objectively identified and measured. He is a avid and articulate proponent of visual animated simulation and predicts that the use of simulation and modeling will be essential to the future survival of business, which will certainly become a survival of the fittest. In other words, companies that don't use such tools will be "left in the dust."

So what is it about CAPRE that leads Hansen to this dramatic forecast? CAPRE utilizes computer tools that model business processes dynamically; so the user can play out different scenarios and accurately and objectively determine how a change in one or multiple inter-related variables will affect the output of a process before the process is actually changed. It is this ability to dynamically model processes that Hansen believes will revolutionize systems reengineering, driving business through the application of scientific principles.

IF BUSINESS IS WAR, WHY AREN'T DEPLOYMENT STRATEGIES THE SAME?

Hansen developed CAPRE from his work in battle management science. Armed with an undergraduate degree in Mathematics and a Masters degree in Computer Science, Hansen spent several years working for a government defense contractor where he headed an Artificial Intelligence Group. This group was responsible for building artificial intelligence into software in order to simulate battle management strategies. It was his job to capture the cognitive processes of battlefield commanders, and he literally got it down to a science -- battle management science -- through simulation and mathematical modeling driven by "what-if" scenarios combined with quantifiable data. He quickly realized that battle management science was based on business economics. His work with simulation and modeling was designed to allow the military to choose targets of opportunity intelligently, optimizing manpower and resources, which was no different than the strategic decision-making objectives implicit in business. Hansen reasoned that if battle management science was based on business economics, then business could and should be driven by battle management science.

"The goal is to win the war, whether it's on the battlefield or on the business front. It's the same difference. I took my work with expert systems in simulating human thought processes and used it in a way in which it hadn't been intended -- applying software systems analysis techniques to business process analysis. My application turned out to be consistent with the thinking embodied in Systems Dynamics, a course of study popularized by M.I.T. The theory is, 'A system is a system, whether it's comprised of people, machines or bits and bytes.' Businesses should be doing systems analysis, and the best way to do that is through computer technology."

Hansen pursued this line of thought at Carnegie-Mellon where he headed the modeling and simulation effort for the prestigious Software Engineering Institute (SEI), the first institute of its kind in the country. There he conceptualized and managed the Post Deployment Software Support (Maintenance) Process Modeling Program, and developed the requirements for effective process modeling technology.

CAPI FORMED TO SHOW BUSINESS HOW TO IMPROVE PROCESSES, PERFORMANCE AND PROFITABILITY

Hansen's work in industry and academia convinced him of the tremendous need for the application of CAPRE in the business place. He founded Computer-Aided Process Improvement (CAPI) in 1994, a consulting firm whose mission was to move companies beyond the philosophical approaches of TQM and CI to achieve concrete, quantifiable productivity improvements through process reengineering.

By that time, Hansen had come to the conclusion that a business process couldn't be reengineered until it first had been engineered. According to Hansen, business and government processes in the U.S., and indeed throughout the world, have never been engineered; rather they have evolved. Hansen convincingly argues that a true process "engineering" requires the same modeling and simulation common to engineering disciplines.

In his first book, Automated Business Process Reengineering: Breaking the TQM Barrier, Hansen describes the progression of processes through five levels of maturity:

1. Initial--ad hoc/chaotic
2. Repeatable--informally designed, with predictable results
3. Defined--process defined with standardized results
4. Managed--process defined (rigorously) and measured
5. Optimizing--improvements fed back into the system

The first three stages are addressed by TQM and CI, but the last two are not. Level 1 processes most benefit from Dr. W. Edwards Deming's 14 points summing up his philosophy of management, which emphasize communication among workers, communication among workers and management, and communication among management, as the primary mechanisms for improvement. Hansen also recognizes Peter Senge's seminal concept of causal analysis as a predictor of results, as opposed to Dr. Deming's fishbone diagram, used to define cause and effect after a problem occurs. Causal analysis is a critical tool for understanding systems, and it is the cornerstone for Hansen's process analysis.

However, while acknowledging the importance of TQM and CI, Hansen argues they cannot stand alone. Only the use of CAPRE tools to model processes allows a complete definition of the process and the ability to predict the results of change.

HOW MATURE ARE YOUR PROCESSES? THE FIVE LEVELS OF PROCESS MATURITY:

Level 1 processes are typically large and inefficient, undocumented, not understood by the users (especially the process as a whole), and difficult to change; and their results are unpredictable. Even applying Deming's 14 points to the process is insufficient. That's because process improvements based on mental models address symptoms, not problems, and quick fixes can hide the real nature of process problems. Hansen believes a way to avoid improvements based on mental modeling is by following Process Reengineering Rule 1: Develop communication about the process to begin understanding. This communication serves as the foundation of business systems reengineering.

Level 2 (Repeatable) processes show that results are predictable, communication occurs among participants, individual tasks are documented, and there is an awareness of the overall process, which is undocumented. When the tasks are documented (written and detailed), and an overall view of the process has been developed, Level 2 is complete. The information obtained through Level 1, verbal communication, forms the foundation for Processing Reengineering Rule 2: Document the process tasks. Level 1 and Level 2 are prerequisites to Level 3 and to utilizing CAPRE tools.

Level 3 (Defined) processes are demonstrated through creating examples. Hansen points out that there are deficiencies in activity diagrams (typically flow charts). They don't accurately represent parallelism in a process; they don't provide any sense of timing, and they don't provide an mechanism for measure process parameters. Additionally, they don't represent the transactions between steps. However, no matter what the shortcomings, the act of diagramming is important, because activity diagrams do offer an overall view of the process, a sense of how the process operates, a limited sense of timing, and the ability to show the complexity of the system. Therefore, Reengineering Rule 3 is: Diagram the whole process. At Level 3, the whole process has been described using activity diagrams.

At Level 4 (Measured), process parameters are defined, and they can be measured. At this time, Hansen introduces the use of modeling icons such as "input source," "storage," "activity," "delay," "batch" and "unbatch blocks," and "worker resources," combined with the use of adding accumulators to sum product and/or time, and mathematical functions to calculate values. Thus, Reengineering Rule 4 is: Measure the process.

Level 5 (Organized) processes require CAPRE tools, because they allow multiple reengineering scenarios to be tested before they're implemented, by applying Rule 5: Simulate the process. Process modeling allows progression through the levels very quickly, because it enables a description of the process, documenting the process tasks, providing an overall view of the process, developing a behavioral model, and simulating the process.

As a system progresses up the levels of maturity, productivity and quality increase. The risk of counterproductive changes increases until Level 4, then decreases dramatically when Level 5 is reached.

CAPRE TOOLS AND HOW THEY ARE USED

At Level 5, when CAPRE tools are introduced, they must have the ability to provide both the functional and behavioral views of a process. Hansen uses iconic blocks, which are graphical symbols that have underlying, programmed logic that determines their behavior. The minimum iconic block set includes:

1. Operations: An activity that performs some function and generates in/output. Both simple and batch operations are required.
2. Transactions: The movement from one operation to another that takes time, requires input and does not modify the inputs in any way.
3. Stores, stocks or reservoirs: A collection of items. It may contain items of the same or different types and have a positive or negative value. A store should always have a defined maximum capacity.
4. Decisions: Checks of conditions for If...Then...Else statements.
5. Events: Something that causes a change in condition.
6. Mathematical and Logical Operations: Add, subtract, multiply, divide, roots, logs, etc., plus And, Or and Not operations.
7. Queues: A store organized in FIFO or LIFO order or priority order.

Other performance requirements include:

1. Time representation as a system variable
2. Hierarchical Decomposition - the grouping of the pieces of a model into single blocks
3. Print capabilities
4. Displays and interactions
5. Input/output
6. Data tracking
7. Ease-of-use
8. Ability to customize blocks
9. On-line documentation and help

Hansen uses the dynamic modeling and simulation tool Extend+BPR™. Extend+BPR is ideal for CAPRE, because it provides dialogue windows, animated iconic blocks, color, the ability to assign attributes, arbitrary time intervals, top-down and bottom-up hierarchical decomposition displays, interaction with parameters and graphical and tabular displays of data.

CAPRE HAS DOCUMENTED SUCCESS STORIES IN EVERY FUNCTIONAL AREA OF BUSINESS, FROM MANUFACTURING TO MARKETING TO MAINTENANCE

Since starting CAPI, Hansen's services have been in great demand, and he has used CAPRE as a critical decision making tool in evaluating process and profit improvement scenarios in nearly every core functional unit of a business including strategic planning, research and development, manufacturing, operations, marketing, sales, distribution, customer service and maintenance. CAPRE has been deployed to:

• Develop an enterprise-wide model of an electric utility to determine the effects of deregulation on the organization. This simulation will predict the effects of organizing the utility into business units and measure Return on Invested Capital and Shareholder Equity.
• Develop an enterprise-wide model to support a client's investment in information technology, demonstrating that significant cycle time and productivity improvements would be achieved through the use of the technology.
• Simulate multiple scenarios of a new product introduction for a major personal products retailer. The results of the model were used to predict monthly sales over a five-year period and to select the optimum product introduction scenario.
• Develop a distribution system simulation for a builders' supplies manufacturer. This model is currently being used to determine optimum methods of phasing out obsolete products and introducing new products into the supply chain.
• Model and simulate scenarios of vertical partnering arrangements with suppliers for a manufacturing application. Simulations were used to predict possible cycle time reductions, cost reductions, staff savings and warehouse space optimization.
• Model and simulate customer service operations of an on-line information provider. The model predicted phone traffic reductions that would result from software enhancements and staff requirements that would result from increased sales volume.
• Develop a simulation to determine the optimum staffing for maintenance operations at an oil refinery. This cost analysis model will determine the required mix of full time labor, contractor support and overtime requirements.

Says Peter Quennell, President of The Change Institute, "Mr. Hansen (has) the strongest understanding of systems evolution and modeling I have encountered. (It is) extremely unusual (to be) able to combine the fields he does. His work offers quite enormous potential, all the way up to effecting national and even global change."

It is easy to conclude that CAPRE is the bridge linking the "soft" sciences of TQM and CI with objective quantifiable metrics to product bottom-line deliverables and clear-cut results. It is through CAPI's approach to process analysis and the use of CAPRE that the successes expected to come from TQM, CI and BPR can finally be realized.

Extend+BPR is a trademark of Imagine That!, Inc., San Jose, CA
CAPRE is a trademark of CAPI, West Chester, Ohio and Ponte Vedra Beach, Florida.