Hajo A. Reijers Design and Control of Workflow Processes Business Process Management for the Service Industry 13 Series Editors Gerhard Goos, Karlsruhe University, Germany Juris Hartmanis, Cornell University, NY, USA Jan van Leeuwen, Utrecht University, The Netherlands Author Hajo A. Reijers Technical University of Eindhoven Department of Technology Management Den Dolech 2, P.O. Box 513, 5600 MB Eindhoven, The Netherlands E-mail: H.A.Reijers@tm.tue.nl Cataloging-in-Publication Data applied for A catalog record for this book is available from the Library of Congress. Bibliographic information published by Die Deutsche Bibliothek. Die Deutsche Bibliothek lists this publication in the Deutsche Nationalbibliografie; detailed bibliographic data is available in the Internet at <http://dnb.ddb.de>. CR Subject Classification (1998): H.4.1, H.5.3, K.4.3, J.1, H.2 ISSN 0302-9743 ISBN 3-540-01186-2 Springer-Verlag Berlin Heidelberg New York This work is subject to copyright. All rights are reserved, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, re-use of illustrations, recitation, broadcasting, reproduction on microfilms or in any other way, and storage in data banks. Duplication of this publication or parts thereof is permitted only under the provisions of the German Copyright Law of September 9, 1965, in its current version, and permission for use must always be obtained from Springer-Verlag. Violations are liable for prosecution under the German Copyright Law. Springer-Verlag Berlin Heidelberg New York a member of BertelsmannSpringer Science+Business Media GmbH http://www.springer.de © Springer-Verlag Berlin Heidelberg 2003 Printed in Germany Typesetting: Camera-ready by author, data conversion by Boller Mediendesign Printed on acid-free paper SPIN: 10872920 06/3142 543210 Foreword This monograph is a beautiful mixture of rigorous scientific research and very practical experiences. The monograph provides several new insights in the field of business process modeling and analysis. The term “workflow process” is used instead of “business process” to express the focus on the handling of a flow of cases in an organization. In the last decade the process view has become the dominant way to structure organizations. Although many books promote this view, they seldom provide a scientifically sound approach to modeling and ana- lyzing business processes. There are two important aspects of a business process: its correctness and its ef- ficiency. The first aspect concerns the correct handling of cases, i.e., without logi- cal errors, and the second concerns the throughput time for cases and the effort re- quired to execute them. The monograph provides new results for analyzing these two aspects, but there are also new results for the redesign of processes. Two ap- proaches are offered: heuristics to redesign an existing process and a derivation method to develop a process given a specification of the desired output of the process. The research for this monograph was conducted by Hajo Reijers during the last five years while he was working halftime for Deloitte & Touche as a management consultant and halftime as a Ph.D. student at the Eindhoven University of Tech- nology. It was a great pleasure for me to be both his thesis advisor at the univer- sity and his supervisor in the consulting firm. The unique combination of scientific work at the university and real practice as a consultant turned out to be very fruit- ful. Many ideas for this research popped up during consultancy work and several scientific results were successfully applied in industry. The monograph contains many interesting results that are worth applying in practice, while it is also a source of new and intriguing questions for further re- search. Kees van Hee National Director of Consultancy, Deloitte & Touche Professor of Computer Science, Eindhoven University of Technology Preface The motivation behind the conception of this monograph was to advance scientific knowledge about the design and control of workflow processes. A workflow proc- ess (or workflow for short) is a specific type of business process, a way of orga- nizing work and resources. Workflows are commonly found within large adminis- trative organizations such as banks, insurance companies, and governmental agencies. Carrying out the tasks of a workflow in a particular order is required to handle one type of case. Examples of cases are mortgage applications, customer complaints, and claims for unemployment benefits. A workflow used in handling mortgage applications may contain tasks for recording the application, specifying a mortgage proposal, and approving the final policy. The monograph concentrates on four workflow-related issues within the area of Business Process Management; the field of designing and controlling business processes. The first issue is how workflows can be adequately modeled. Workflow model- ing is an indispensable activity to support any reasoning about workflows. Differ- ent purposes of workflow modeling can be distinguished, such as system enact- ment by Workflow Management Systems, knowledge management, costing, and budgeting. The focus of workflow modeling in this monograph is (a) to support simulation and analysis of workflows and (b) to specify a new workflow design. The main formalism used for the modeling of workflows is the Petri net. Many ex- isting notions to define several relevant properties have been adopted, such as the workflow net and the soundness notion. The second issue addressed in this monograph is the design or redesign of a workflow. Redesigning business processes has received wide attention in the past decade. Until this day, it has been seen as one of the major instruments available to companies for improving their performances. The monograph presents the Product-Based Workflow Design (PBWD) method, which derives a workflow de- sign from the characteristics of the product it supports. This concept is well known in manufacturing where an assembly line may be determined on the basis of a Bill-of-Material, but is rather unorthodox in administrative settings. The method allows us to use context-specific design targets, such as cost reduction or respon- siveness improvement, to determine the final design. Aside from its methodologi- cal and technical foundation, practical experiences are presented within a large Dutch bank and a social security agency with PBWD. In addition, the monograph contains about 30 redesign heuristics. These heuristics are derived from both exist- ing literature and practical experience. They can be used to redesign business processes in a more conventional, incremental way. A case description is added to illustrate the application of these heuristics. VIII Preface The third issue is the performance evaluation of workflow processes. A new stochastic version of the Petri net is presented that addresses both the structural characteristics of workflows and its typical timing behavior. Two techniques are described that can be used to determine the stochastic behavior of a workflow de- sign as measured in its throughput time. The throughput time of a single case is defined as the amount of time that passes from the start of its processing to its completion. Both techniques may help the designer of a workflow to determine whether the design targets will be achieved by the new design. The first technique uses basic building blocks and a well-known synthesis technique to construct a workflow model that can subsequently be analyzed exactly. The Fast-Fourier Transform is used to improve the efficiency of the analysis. The second technique can be applied to the subclass of sound, free-choice, and acyclic workflow nets to determine lower and upper bounds for the throughput time distribution of the re- spective net. An important restriction of both techniques is that they abstract from resource constraints. The fourth and last issue addressed in this monograph is how to sensibly allo- cate resources in an operational workflow. Once again, the performance indicator focused on is the throughput time. A familiar approach used in industry is to add extra resources at bottle-necks within the business process, i.e., the classes of re- sources that are pressed the hardest, to reduce the throughput time. This approach is critically assessed and its limitations are presented. An alternative method for marginal allocation is presented. Its optimality is proven for a subclass of stochas- tic workflow nets with resource constraints. To derive an inductive feeling of its effectiveness outside this class, a workbench of workflow nets has been devel- oped. Simulation techniques have been used to test the method of marginal alloca- tion on this workbench, which has led to cautious but positive conclusions. The common feature of the treatment of the four issues is an attempt to provide scientific support for Business Process Management and the management of work- flows in particular. February 2003 Hajo A. Reijers Contents 1 Introduction .1 1.1 The Business Process .4 1.1.1 Products and Business Processes .4 1.1.2 Performance Targets 6 1.1.3 Clients 6 1.1.4 Orders and Triggers .7 1.1.5 Organization 7 1.1.6 Resources .7 1.1.7 Tasks and Subprocesses .8 1.1.8 Categorizations 9 1.2 Business Process Management 11 1.3 Business Process Redesign 13 1.3.1 Popularity 14 1.3.2 Risks and Challenges .15 1.4 Workflows .18 1.4.1 Workflow Management Systems .18 1.4.2 Workflow Characteristics 20 1.5 Workflow and Logistic Management 24 1.6 Objective of the Monograph 26 1.6.1 Modeling: Chapter 2 26 1.6.2 Design: Chapter 3 27 1.6.3 Performance Analysis: Chapter 4 27 1.6.4 Resource Allocation: Chapter 5 .27 1.6.5 Redesign: Chapter 6 .28 1.6.6 Systems and Experiences: Chapter 7 .28 2 Workflow Modeling 31 2.1 Modeling Purposes 32 2.1.1 Training and Communication 32 2.1.2 Simulation and Analysis 32 2.1.3 Costing and Budgeting 33 2.1.4 Documentation, Knowledge Management, and Quality 33 2.1.5 Enactment 33 2.1.6 System Development .33 2.1.7 Organization Design 34 2.1.8 Management Information 34 X Contents 2.2 Workflow Components . 34 2.2.1 Case Component 36 2.2.2 Routing Component . 36 2.2.3 Allocation Component .36 2.2.4 Execution Component . 37 2.3 Modeling Techniques 38 2.3.1 Purpose of the Workflow Model . 38 2.3.2 Properties of the Workflow . 39 2.4 Petri Nets . 40 2.4.1 Preliminaries to Petri Nets . 41 2.4.2 Petri Net Basics . 43 2.4.3 Workflow Nets 45 2.4.4 Modeling Time 49 2.4.5 Stochastic Workflow Nets . 53 3 Workflow Design . 61 3.1 Process and Workflow Design 62 3.1.1 Tools 63 3.1.2 Techniques . 63 3.1.3 Methodology . 64 3.2 Product-Based Workflow Design 69 3.2.1 The Relation between Process and Product . 69 3.2.2 Characterization . 72 3.3 PBWD Methodology . 72 3.3.1 Scoping 73 3.3.2 Analysis . 76 3.3.3 Design 90 3.4.4 Evaluation 118 3.4 Review . 121 3.4.1 Advantages 121 3.4.2 Critique 123 3.4.3 Drawbacks . 124 3.4.4 Points of Interest 125 4 Performance Evaluation of Workflows . 127 4.1 Context 128 4.1.1 Formal Analysis 128 4.1.2 Throughput Time . 129 4.2 Analysis of Timed Petri Nets 130 4.2.1 Deterministic Timing . 131 4.2.2 Non-deterministic Timing . 131 4.2.3 Stochastic Timing 132 4.3 Exact SWN Analysis . 133 4.3.1 Basic Method . 134 4.3.2 The Iteration Structure . 142 4.3.3 Other Extensions . 148 Contents XI 4.4 Bounded SWN Analysis 154 4.4.1 Bounds and Supporting Notions 157 4.4.2 Correctness of Lower and Upper Bounds 160 4.4.3 Efficiency 169 4.5 Hybrid Approach .171 4.5.1 Constructing a Hybrid Net .171 4.5.2 Analyzing a Hybrid Net .172 4.6 Review .175 5 Resource Allocation in Workflows . 177 5.1 The Resource-Extended SWN .180 5.2 Goldratt's Conjecture .183 5.2.1 The Goldratt Algorithm . 184 5.2.2 Limits .184 5.3 The Method of Marginal Allocation 186 5.3.1 Application of Marginal Allocation . 187 5.3.2 Optimality 188 5.3.3 Limits .190 5.4 Workbench 192 5.4.1 Pathological Nets .194 5.4.2 Big Nets .198 5.4.3 Practical Nets .201 5.4.4 Evaluation 205 5.5 Conclusion .206 6 Heuristic Workflow Redesign 207 6.1 Redesign Heuristics .208 6.1.1 The Devil's Quadrangle .208 6.1.2 Task Rules .212 6.1.3 Routing Rules 214 6.1.4 Allocation Rules 217 6.1.5 Resource Rules 220 6.1.6 Rules for External Parties 223 6.1.7 Integral Workflow Rules .226 6.2 The Intake Workflow .228 6.2.1 Workflow Notations 228 6.2.2 Initial Situation 230 6.2.3 Redesign 236 6.3 Conclusion .242 7 Systems and Practical Experience .245 7.1 Short-Term Simulation for the GAK Agency 245 7.1.1 Current State 247 7.1.2 Architecture .248 7.1.3 GAK Case 250 XII Contents 7.2 Product-Based Workflow Design for the GAK Agency . 256 7.2.1 Analysis . 257 7.2.2 Design 263 7.2.3 Evaluation 272 7.3 Product-Based Workflow Design for the ING Bank . 273 7.3.1 Scoping 274 7.3.2 Analysis . 275 7.3.3 Design 277 7.3.4 Evaluation 279 7.3.5 Other Applications of PBWD within ING Bank Nederland 280 7.4 Conclusion . 282 8 Conclusion 283 8.1 Reflection 283 8.1.1 Area of Application . 283 8.1.2 Style . 284 8.2 Future Work 285 8.2.1 Workflow Design 285 8.2.2 Performance 286 8.2.3 Resources . 287 8.2.4 Other Workflow Issues 288 A The Bottom-Level Workflow Model 289 B The Fourier Transform 303 C The Simulation of the Workbench . 305 References 309 1 Introduction In the late eighties, the idea of process thinking emerged in industry. This was the time that major American companies such as IBM, Ford, and Bell Atlantic saw the benefit of focusing on cross-functional business processes. This contrasted with the traditional focus on typical functional business areas such as procurement, manufacturing, and sales. Process thinking should enhance the service to clients by extending beyond ad hoc, local decision making that pays little attention to the effectiveness across the process. The focus on business processes in organizing and managing work may seem quite straightforward today, but this was not always the case. In Figure 1.1, this historical development is given. Prehistoric times Ancient times Middle Ages Industrial times worker's capabilities worker's focus entire process for all products entire process for a single product single part of a process for a single product pure generalist intermediate specialist pure specialist Fig. 1.1. How the focus on the process has disappeared In prehistoric times, people supported themselves by producing their own food, tools, and other items. In other words, people executed their own production proc- esses, which they knew thoroughly. In ancient times this generalist work form evolved into an intermediate level of specialism. People started to specialize them- selves into the art of delivering one specific type of goods or services, culminating in the guilds of craftsmen of the Middle Ages. Not only did a craftsman barter or H.A. Reijers: Design and Control of Workflow Processes, LNCS 2617, pp. 1-29, 2003.  Springer-Verlag Berlin Heidelberg 2003 . managerial processes: the business processes that direct and coor- dinate the primary and secondary business processes. The former processes im- pose business. order for a product or service. For some business processes, the receipt of an order is the start event of each of its executions. For other processes, the