A Networks Approach to Business Process Management
A large portion of the operations in a company can be modeled as coordinated sets of activities called business processes. Managing and improving these business processes is crucial for the performance and growth of a firm. We provide a new methodology for the analysis and optimization of business processes where, instead of analyzing individual processes, a global approach based on the input/output relationships between all activities in a firm is used. More specifically, we introduce the Activity Network, which is a graph induced by all the activities in a company. Through this network, we develop tools that provide insights that could not be obtained by traditional business process management techniques. For example, statistics on this graph provide insights into how a company grows and functions. In addition, by using centrality measures and ranking algorithms on this network, we develop metrics to identify the most valuable activities in a firm. Finally, we formulate graph partition problems that capture organizational trade-offs, such as transaction cost vs. governance cost. Quantifying these trade-offs may help managers strategically optimize organizational structure
We illustrate this methodology using data from a real-world large insurance company, with over 1000 activities. Our analysis suggests that, despite the overall large number of activities, this firm is centered and continues to grow around a small number of "crucial" activities.
This is a joint work with the Services Research group at IBM Research - Almaden.